NEW YORK — HSBC Holdings PLC, London, ranked as the top company worldwide for its overall corporate governance and strategic approach to climate change risks and opportunities, according to a RiskMetrics Group study of 40 of the largest financial services institutions.
HSBC scored 70 on a scale of 100, the highest possible in the report’s evaluation of 14 indicators of climate change governance, evaluating board oversight, management execution, public disclosure, emissions accounting and strategic planning.
Of the 40 financial institutions analyzed, 29 are diversified banks, including HSBC; six are predominantly asset-management-oriented companies; and five are predominately investment banking companies.
Other leaders were Barclays PLC, London, with a score of 61; Citigroup Inc., New York, and Deutsche Bank AG, Frankfurt am Main, with 60 each; Goldman Sachs Group Inc., New York, 53; Merrill Lynch & Co. Inc., New York, 52; and Morgan Stanley, New York, 49.
Boston-based State Street Corp.’s score of 36 ranked it at the top of the predominantly asset-management-oriented companies in the study.New York-based RiskMetrics’ climate change research group performed the study, commissioned by Ceres and the Investor Network on Climate Risk, Boston-based organizations to address environmental issues related to corporations.
The median score was 42, “suggesting that all banks have room for improvement,” according to a statement about the study.
“As one of the world’s largest economic sectors, and as one that reaches virtually every consumer and business, the financial services industry must be involved in mitigating climate change and its impacts. At the same time, banks face an immense but as yet largely untapped opportunity to enter new markets and develop more efficient and environmentally sound industries that will benefit generations to come, while preserving their longstanding leadership role in wealth and capital formation,” Mindy S. Lubber, Ceres president and director, Investor Network on Climate Risk, wrote in the study.
“Banks have the reach, influence and access to capital required to lead the changes needed to expeditiously address global warming.”
The study analyzed 16 financial institutions based in the United States, 15 in Europe, five in Asia, three in Canada and one in Brazil.
HSBC received 13 out of 16 possible points for its board oversight, noting its board of directors “is actively engaged in climate change policy and has assigned oversight responsibility to board member, board committee or full board.”
Overall among the financial services companies in the study, 21 of them offer climate-related investment products, including 10 with climate-specific funds and indexes. “Nearly all of these investment products have been launched in the last two years,” the statement said.
Only 12 financial services companies reported board-level oversight of climate change; nine discuss climate change or related issues in their 2007 securities filings; and six banks calculate a carbon price as part of their energy-related lending decisions. One bank — Bank of America — has set a target to limit fossil fuel emissions associated with the utility portion of its loan portfolio.
Among other findings, 29 of the financial institutions documented their involvement in financing renewable energy, while 28 disclosed their greenhouse gas emissions from operations, and 10 pledged to become carbon neutral.
The information was collected over the past six months from securities filings, company reports, company websites and questionnaires.
Ranking the lowest in the study were Legg Mason Inc., Baltimore, scoring 3, and Franklin Resources Inc., San Mateo, Calif., 1. Bear Stearns Cos. Inc., New York, with a score of zero, and Lehman Brothers Inc., with a 26, ranked as the worst among investment banks, the study found.
Tim Munoz, director-corporate marketing and communications at Legg Mason, said, “We’re very proud of our current and future performance in the area of socially responsible, sustainable investment, our core business. For us, job one is to make sure our products and offerings are environmentally accountable and responsible and advance the green agenda. We are committed to environmentally sound practices.”
Legg Mason is also working with the Carbon Disclosure Project to become carbon compliant by meeting performance standards, Mr. Munoz added.
Lisa Gallegos, director-media relations at Franklin Resources, said she couldn’t comment without having seen the study.
Monica Orbe, Bear Stearns spokeswoman, said, “Clearly our score is not indicative of the emphasis Bear Stearns places on environmental issues.”
Lehman Brothers spokesman Brian Finnegan didn’t respond to requests for comment.
RiskMetrics sent an advance of the study’s findings to each of the companies with their profile and score, said Sarah Cohen, RiskMetrics spokeswoman.
