Investors With $4 Trillion Ask Banks to Raise Climate Ambitions

(Bloomberg) -- A coalition of investors overseeing a combined $4.2 trillion of assets are asking the world's biggest banks to take more aggressive action in addressing climate change and biodiversity decline.

Aviva Investors, Fidelity International and M&G Investments were among 115 investors that wrote to 63 banks, including JPMorgan Chase & Co., Deutsche Bank AG and Standard Chartered Plc, to take several steps beyond what they've already committed to doing, including a complete exit from all coal finance by 2040 at the latest. The investors also requested that banks publish short-term climate targets before their annual shareholder meetings next year, and identify and disclose their impacts and dependencies on biodiversity.

The fund managers said banks can play a key role in enabling the low-carbon transition and helping avert the worst consequences of climate change and biodiversity loss. It's also in their own self interest to throw their weight behind efforts to limit global warming since banks are exposed to the potentially significant effect on companies' profits and the value of their assets stemming from the transition away from fossil fuels and the physical impacts of climate change and nature loss.

“The message from investors is clear: Distant net zero targets and warm words about the importance of biodiversity are not enough,” said Jeanne Martin, senior campaign manager at ShareAction, the U.K. nonprofit that coordinated the letters. “Investors want concrete action now, and those banks which fail to respond can expect serious challenges at their next AGMs.”

The investor group, which also includes Man Group Plc and Federated Hermes Inc.'s EOS division, said they were calling on the banks to strengthen their strategies ahead of the United Nations' conventions on biodiversity and climate change that will be held in October and November respectively.

They want the banks to go beyond the pledges they have already made through voluntary initiatives such as the Net-Zero Banking Alliance. Signatories to that initiative have pledged to set their first round of climate targets by the end of next year, whereas the investor letters call on banks to publish comprehensive short-term climate targets, defined as five to 10 years, and covering all relevant financial services, ahead of banks' mid-year annual meetings.

The investor coalition also asked the banks to align their climate plans with the International Energy Agency's net-zero scenario that calls for an end to fossil fuel exploration and development, or another 1.5 degrees Celsius scenario that doesn't rely on so-called negative emission technologies. In addition, they called for banks to publish a biodiversity strategy before the October summit that covers their impacts and dependencies on the natural world, as well as a commitment to engage in the development of the Taskforce on Nature-Related Financial Disclosures.

The investors have asked the banks to respond to their letters by Aug. 15, and warned lenders' progress on these issues “may be taken into consideration within investors' 2022 AGM voting action and engagement activities.”