ESG round-up: Lloyds becomes first UK bank to halt new oil and gas funding

The latest developments in sustainable finance: Members of Congress urge banks to leave SFOF; Dutch investors say no oil and gas firm is Paris-aligned.

Lloyds Banking Group has become the first UK lender to commit to stop funding new greenfield oil and gas projects. ShareAction CEO Jeanne Martin commended the bank, saying that it has “set a new standard for the UK banking industry”. She encouraged other British banks such as Barclays and HSBC to follow suit.

Staying with Lloyds, research published by the bank has found that only 50 percent of small businesses understand the meaning of “net zero”. More than 75 percent of these businesses do not have a strategy to contribute to the transition to net zero. Forty percent of respondents said the UK government has not provided enough support to help them work towards the net zero targets.

Fourteen members of the US Congress – including Elizabeth Warren and Alexandra Ocasio-Cortez – have written to the CEOs of US banking giants JPMorgan Chase and Wells Fargo urging them to end their sponsorship of the anti-ESG lobby group, the State Financial Officers Foundation (SFOF). Last month, JPMorgan CEO Jamie Dimon and Wells Fargo CEO Charles Scharf said they will “probably” cancel their support for the group after Illinois congressman Sean Casten – the convener of the letter – informed them that the organisation “is spreading disinformation and blocking the capital sector from freely allocating capital”. Responsible Investor has reached out to the banks for comment.

A Dutch investor group has said it is not “fully convinced” that any oil and gas companies are aligned with the Paris Agreement. The Dutch Climate Coalition, which represents around €1.5 trillion of assets under management, previously released a statement in April asking firms in the sector to align with the Paris goals. The group – which includes PGGM, NN Investment Partners and Actiam – is now calling on oil and gas companies to prove their commitment to contributing to a global decline in emissions by 2030 in line with the 1.5C target. To achieve this, they suggest boosting low-carbon solutions, explaining how natural gas acts as a transition fuel, and not using high oil prices to increase oil investments.

Texas attorney general Ken Paxton has launched an investigation into Bank of America, Wells Fargo, Morgan Stanley, JPMorgan Chase, Goldman Sachs and Citigroup for possible violations of consumer protection laws. This is the third investigation which has been launched by Paxton into companies for alleged deceptive trade practices linked to ESG-related action. The six banks are all being investigated for collusion-in-lending practices. JPMorgan Chase and Citigroup declined to comment. RI has reached out to the other banks for comment.

Deutsche Bank has set net-zero targets for four of the highest-emitting sectors in its loan book, accounting for roughly half of its scope 1 and 2 emissions. The bank is looking to cut financed emissions for oil and gas by 23 percent by 2030. For the power generation, automotive and steel sectors, it is aiming for a reduction in emissions intensity of 69 percent, 59 percent and 33 percent by the same year, respectively. Clients in scope of the targets account for around 13 percent of the bank’s €250 billion loan book, with the targets “embedded into its risk appetite frameworks”. Deutsche previously revealed that just 1 percent of its clients accounted for 70 percent of emissions in its loan portfolio.

Nearly 20,000 companies have disclosed their environmental data through CDP. This represents the highest number of disclosures since the non-profit launched the project two decades ago, and a 233 percent increase since the Paris Agreement in 2015. The top countries for corporate disclosures this year were the US, China, Japan, the UK and Brazil.

The ISSB, the body created by the IFRS Foundation to create global corporate sustainability standards, has voted unanimously to require firms to disclose their full value chain greenhouse gas emissions (Scopes 1,2 and 3). The decision was reached at the body’s meeting in Montreal yesterday. ISSB also announced that it will develop “relief provisions” to aid companies in meeting the Scope 3 requirements, potentially including giving companies more time to disclose or working with jurisdictions on “safe harbour” provisions.

An M&G Investments report suggests there has been minor progress towards achieving the UN’s 17 Sustainable Development Goals. In 2021, only seven of the SDGs are on track to meet the 2030 deadline, with 15 having not seen any evolution in the past year. The annual report found that two of the SDGs – affordable and clean energy (SDG 7), and reduced inequalities (SDG 10) – have seen a deceleration in progress.

Barclays and Oxford University Sustainable Finance have announced a three-year agri-climate partnership. The project will look to establish sector decarbonisation solutions for measuring farm-level greenhouse gas emissions. The data will be used by Barclays and other financial institutions to support agriculture clients in lowering their emissions and transitioning to more sustainable practices in line with the Paris Agreement. The partnership and project will also aid Barclays with its net-zero transition.

Origin Energy has announced that it is exiting gas exploration. Following the company’s decision, which was announced at its AGM, the Australian Centre for Corporate Responsibility recommended that shareholders support Origin’s Climate Transition Action Plan (CTAP). Around 94 percent of shareholders voted in favour of CTAP, with 44 percent also asking the company to align its capital allocation with 1.5C pathway.

A global investor alliance led by ShareAction, The Health Foundation and Guy’s & St Thomas’ Foundation has been launched to improve overall population health. The group of 35 investors, which collectively manage $5.7 trillion, aims to reduce health inequality through the the Long-term Investors in People’s Health initiative. They hope to set the example for other investors by embedding health policies and practices into their businesses.