A group of 80 institutional investors called on Goldman Sachs Group, J.P. Morgan Chase and 59 other banks worldwide to align executive compensation with long-term climate risks goals as part of a series of recommendations on integrating climate risks into banking activities, said a report released Thursday.
The report, “Are Banks Prepared for Climate Change?” found that none of the 61 banks analyzed measures their carbon footprint and few conduct climate stress tests.
Under the report's methodology of scoring banks on their climate change risk management and strategies as well as seeking business opportunities to capitalize on climate change risks, seven of the top-20 ranking banks are based in China.
The analysis by Boston Common Asset Management, supported by the other investors in the group, found “many banks had not incorporated climate-specific considerations into their risk management practices, nor had they developed long-term climate strategies.”
The group “called upon banks to accurately analyze risk levels in their lending models and develop strategic management plans that consider the implications of climate change in credit and risk assessments.”
The investor group also called for the oversight of boards of the banking companies to integrate climate change into their decision-making process.
The report ranks only the top 20 banks, whose top five, in order, are Westpac Banking Corp., National Australia Bank Ltd., Toronto-Dominion Bank, Banco Bilbao Vizcaya Argentaria SA and Citigroup. The report does not reveal the scores used to measure each bank's ranking, and it disclosed the names of only 45 of the 61 banks analyzed.
Investors in the group include the A$8 billion ($5.8 billion) Local Government Super, Sydney; the $3.3 billion Pension Boards United-Church of Christ Inc., New York; and Colmeta, a Milan-based private pension fund for the metalworking industry.
Others investors include Calvert Investments, Miller/Howard Investments, Green Century Capital Management, Pax World Management, Walden Asset Management, Zevin Asset Management and the Interfaith Center on Corporate Responsibility.
The report is available on Boston Common's website.