UK finance sector ninth biggest CO2 emitter in the world, report finds

A Greenpeace-led report has found UK banks and assets managers were responsible for 805m tonnes of CO2 in 2019 – making it the ninth-largest carbon emitter worldwide.  

The report – authored by both Greenpeace and the World Wildlife Foundation (WWF) – detailed that the findings would make the City of London the ninth biggest emitter of CO2 in the world if it were a country, ranking it higher than the industrial-heavy economy of Germany.

The current top ten CO2 emitters by country are China, the US, India, Russia, Japan, Germany, Iran, South Korea, Saudi Arabia and Indonesia.

The study was carried by the South Pole using carbon accounting methodology PCAF to work out the emissions linked with the lending and investment activities of the UK’s financial market. The analysis found that UK banks and asset managers financed carbon emissions that were 1.8 times more than the yearly net emissions of the UK as a whole.

According to Greenpeace, the findings demonstrate that UK finance should be considered a ‘high carbon sector’ like coal mining, aviation, transport and oil and gas extraction.

Greenpeace UK executive director John Sauven said, “Finance is the UK’s dirty little secret. Banks and investors are responsible for more emissions than most nations and the UK government is giving them a free pass. How can we say we’re ‘leading the world on climate action’ while allowing financial institutions to plough billions into fossil fuel production every year? The claim is almost laughable.”

Sauven also noted the ‘true extent’ of the carbon emissions funded by the UK finance sector is anticipated to be far bigger than the analysis suggests, as the report only used a sample of fifteen banks and ten asset managers and excluded activities such as underwriting.

Currently, UK financial institutions are not regulated in similar ways to other high carbon sectors and are not legally required to connect their financing activities with the UK’s climate commitments.

WWF UK chief executive Tanya Steele added, “Voluntary pledges aren’t getting the job done. The UK Government must show the global leadership expected of the COP26 Presidency and commit to mandating all financial institutions to have net-zero transition plans that cover their investments in every corner of the globe.”

A key way financial institutions can get to grips will how to bring down their carbon emission impact is through the establishment of Environmental, Social and Governance departments. Recently, Deutsche Bank revealed it is establishing an environmental, social and governance (ESG) Centre of Excellence (COE) in Singapore.

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