GHG Emissions, Finance, Sourcing Renewables - April 5, 2024
North America’s Three Largest Banks to Disclose Energy Supply Ratios
JPMorgan Chase, Citi, and the Royal Bank of Canada have agreed to publicly disclose their financing ratio of clean energy supply financing to fossil fuel extraction financing (Energy Supply Ratio) and their underlying methodology.
The disclosures are crucial to gaining a better understanding of the role banks play in the climate transition, and whether they are on track to meet their emission reduction goals.
The banks reached this agreement with New York City Comptroller Brad Lander and trustees of the New York City Employees’ Retirement System, Teachers’ Retirement System, and Board of Education Retirement System (the Pension Systems).
The Energy Supply Ratio highlights the economic impacts of the banks’ energy supply financing and serves to provide useful information for investors where disclosure is currently limited. It will help investors to better measure a bank’s transition risks and opportunities, keep track of the banks’ net zero and sustainable finance progress, as well as the pace and scale of the renewable energy transition.
“Despite their commitments to decarbonize, U.S. and Canadian banks have financed over $1 trillion of fossil fuel extraction since the Paris Accords. The transition from financing fossil fuels to low-carbon energy is going far too slowly – and thus far, it hasn’t even been possible for shareholders to track,” said Comptroller Brad Lander, in a statement.
He continued, “We appreciate JPMorgan, Citi, and RBC agreeing to provide greater transparency so that long-term investors can more effectively measure how well they are or aren’t living up to their commitments. As leading public investors, we expect that energy supply ratio disclosure will become a new standard for the banking sector. We call on Bank of America, Goldman Sachs, and Morgan Stanley to follow suit at a time when our planet and investment portfolios are at risk.”
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