Banks Must Save Environment. Environmental conservation is preserving the natural world from collapsing due to human activities, such as deforestation, burning fossil fuels and littering sewage without proper disposal. The conservation reasons are enjoying a long healthy life, maintaining the environment for future generations, and preserving wildlife.
The threat to the climate is the most critical environmental challenge. As per Intergovernmental Panel on Climate Change (IPCC), ignoring the environment will result in a 3-5°C average global temperature increase by 2250. To prevent the ill effects of climate change on ecosystems and society, rapid, far-reaching and unprecedented changes in all aspects of culture are urgently needed. Banks have a unique role to play in conserving the climate.
Banks produce greenhouse gases directly through their towering offices and banking activities. Their most significant contribution to destroying the climate is indirect, financing projects that generate toxic emissions. Banks finance the coal, oil and gas industry, effectively delaying the much-needed transition from a fossil fuel-based to a renewable energy-based economy.
As per the Banking on Climate Chaos report, of March 2022, between 2016 and 2021, the world’s 60 largest private sector banks funded a staggering USD 4.6 trillion into fossil fuel projects globally. Banks have increased lending for renewable energy, but no bank has yet committed to ending the financing of the fossil fuel industry altogether.
The world is quickly heading towards a point of no return. The current course makes it challenging to prevent the catastrophic impacts of climate change. The costs will be substantial in terms of untold human suffering and the deaths of millions. The world is changing fast. Industrial development evolves rapidly. Banking will probably survive through these changes, but banks might.
Climate change means frequent severe weather events, such as floods, droughts, and typhoons. These events bring physical risks that can hurt businesses and the overall economy. Reasonable steps to curb climate change can avoid transition risks and reduce operating costs. A worsening climate can impact firms’ operational stability, creditworthiness, and financial performance
Banks should be either part of the solution or part of the problem. It is not just a matter of what is right but also long-term economic viability. Enabling sustainable climatic conditions is one way that banks can future-proof themselves. Banks must take environmental protection into account when making lending decisions. Commercial and wholesale banking must incorporate environmental due diligence into the lending process, including site visits and assessing borrowers’ ecological records.
Banks must encourage the use of new products and services that protect the climate, like paperless statements and credit cards in this way Banks can Save Environment. Banks should become carbon-neutral by installing windmills and solar panels. Units that recondition and sell surplus office equipment and furniture should be charged low-interest rates and financed on a priority basis. Climate change increasingly poses one of the most significant long-term threats to investments thus the statement is true by Paul Hawken that At present, we are stealing the future, selling it in the present and calling it Gross Domestic Product”.
Branches should enforce the use of energy consumption in various departments through effective thermostats, heaters and air conditioning systems and energy-efficient lighting systems. Use of photo-cell technology that powers lights and exterior signage only when necessary with the help of timers should be made mandatory.
The electronic and telephone banking investment enables customers to leave the car at home and bank anytime. Easy automatic payments have reduced the need to write and send cheques. Paperless statements, bills and annual reports save trees. Besides saving operational costs, automation saves the environment and enhances customer delight.
Banks must offer mutual funds that focus on investment in ‘green’ companies. They can provide a unique line of credit to help homeowners invest in energy-efficiency upgrades for their homes. In Canada, one bank provides an automobile insurance product that allows customers to offset CO2 through a tree-planting program.
The Paris Climate Agreement of 2015 stipulates guidelines to tackle the threat of climate change by keeping a global temperature rise this century well below 2 degrees Celsius. The global carbon dioxide emissions must be more than halved from 2010 levels by 2030 and reach ‘net zero’ by 2050. Banks have a significant responsibility to ensure this development by financing energy-efficient units. Banks must protect the environment using their financial muscles.
Rightly said, “ Although the magnitude of climate change may make individuals feel helpless, individual action is critical for meaningful change.”
-Hargovind Sachdev
