Four big banks throw weight behind climate finance center

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Four of the biggest U.S. banks have joined with a clean energy nonprofit to help accelerate the transition away from fossil fuels.

The Rocky Mountain Institute’s new Center for Climate-Aligned Finance will focus broadly on developing practical solutions to help financial institutions navigate the challenges involved in the shift to renewable energy — as lenders, power consumers and corporate citizens. Bank of America, JPMorgan Chase, Goldman Sachs and Wells Fargo provided financial support to launch the center and also plan to work with the center.

Depressing carbon emissions to net zero by midcentury will require massive collaboration across private and public sectors alike, said Paul Bodnar, chair of the center and managing director of the institute.

“But one sector provides the lifeblood that powers all the others, and that is finance,” he said.

The banking industry has broadly recognized in recent years that it can play a role in mitigating the worst impacts of climate change. Some banks have carved out niches lending for renewable energy production, while others have pledged to reduce or eliminate their financing of fossil fuels.

Activists and environmentally conscious investors contend that many of the biggest banks still aren’t doing enough. Some investor groups, for instance, have called on banks to provide more detail and transparency about how their lending activities are affecting the environment.

The banks backing the center highlighted some of the climate initiatives they had taken on their own. Bank of America, for example, has committed to using only renewable energy and weaving climate impacts into its risk management practices, said Alex Liftman, BofA’s global environmental executive.

“But decarbonizing a whole economy is enormously complex and really challenging,” she said. “As ambitious as all of the work is … we recognize that no one player can drive progress alone.”

The center will have four main tasks, Bodnar said. First, it will shape financial industry guidance for working with carbon-intensive sectors, such as steel or utilities. It will contribute to global standardized frameworks on decision-making for the financial services industry. The center will also support individual financial institutions and work to shape public discourse around climate finance.

The nonprofit did not disclose how much financial support the banks had provided, but Bodnar said the funding would support a staff of 10 to do its initial work. He said the center hopes to expand its staff over time.

Bodnar said the center’s creation was inspired by the Poseidon Principles, which aims to encourage financing of more environmentally friendly shipping vehicles. He said the center will set standards for what kind of data banks should consider, what benchmarks they should apply and how they can work with clients, rather than lose them to competitors with lower standards.

The banks also emphasized the opportunity involved in transitioning to a carbon-neutral economy.

“We’re focused on driving this transition certainly because it will protect our environment, but also we believe it has enormous potential to create good-paying jobs, to drive economic growth and stability, to help advance other sustainability goals,” Liftman said. “Ultimately, I think all of our goals are to ensure our communities are not just viable for the long term, but really vibrant.”