Billionaire hedge fund manager says banks committed to net zero while lobbying against climate regulations are guilty of ‘greenwashing’
Billionaire hedge fund manager Sir Christopher Hohn has called on shareholders to vote against directors of banks which fail to adequately measure and report on their exposure to climate risk, after new research today warned many of the world’s biggest financial institutions are continuing to fund the expansion of fossil fuel infrastructure.
Hohn – who is the founder and portfolio manager of The Children’s Investment (TCI) Fund Management, which manages more than $40bn in assets worldwide – has long campaigned for firms to better disclose their emissions data through his ‘Say on Climate’ initiative.
But following research findings today showing leading banks have collectively enabled at least $740bn of financing for fossil fuels over the past two years, despite the increased adoption of fossil fuel lending exclusion policies and net zero targets across much of the financial sector, Hohn accused banks of ‘greenwashing’.
“Any bank making a net zero promise whilst actively lobbying against necessary climate regulation – such as mandatory disclosure of borrowers’ emissions and climate action plans – is greenwashing,” he said. “Shareholders should vote against the directors of banks who are hiding their exposure to climate risk.”
The research, which was carried out by InfluenceMap, argues the world’s 30 largest listed financial institutions, including 27 companies with major banking arms, are undermining their net zero commitments by continuing to fund fossil fuel expansion, and, in some cases, actively lobbying against green finance policies.
The NGO looked at the lending, equity, bond underwriting, and asset management activities of these 30 financial firms in 2020 and 2021 to assess their alignment with their stated climate policies, reporting, and commitments, in addition to analysing their lobbying activities via industry associations.
All banks assessed for the research, except China’s Ping An Group, have signed up to the Glasgow Financial Alliance for Net Zero, which commits them to achieving net zero emissions by 2050 across their financial activities and setting substantial emissions reduction targets for 2030.
To date, however, just 11 financial institutions assessed have set 2030 decarbonisation goals across multiple sectors, and all 30 of them remain members of industry associations that have actively lobbied to weaken key green finance policies in the UK, European Union, and USA, the report argues.
The banking arms of these firms have also cumulatively facilitated at least $740bn in financing for the fossil fuel industry and its value chain over the past two years, which amounts to seven per cent of their total financing during the period.
In addition, the InfluenceMap report also accuses the asset management wings of the analysed firms’ businesses of underinvesting in the net zero transition, estimating they cumulatively hold at least $222bn of investments in fossil fuel industries, with a far lower proportion set aside for green energy and transport assets.
Report author Eden Coates, a senior analyst at InfluenceMap, said global financial institutions held significant political and economic influence, which they were using to delay action essential to tackling the climate crisis.
“There is a stark disconnect between what they say about climate change and what they’re actually doing – particularly when it comes to pushing back on policymakers’ attempts to align financial regulation with climate goals,” she said. “If they are serious about achieving their net zero targets, they should set concrete and actionable short-term targets across all aspects of their operations.”
Want to find out more about how the net zero transition will impact your business? You can now sign up to attend the virtual Net Zero Finance Summit, which will take place live and interactive on Tuesday 29 March and will be available on demand for delegates after the event.