IIF Statement on CAP/Sierra Club Report on Role of U.S. Banking Sector in Global Carbon Emissions
December 15, 2021
Washington, D.C. — Tim Adams, President and CEO of the Institute of International Finance, issued the following statement in reaction to a report by the Center for American Progress and the Sierra Club on the role of the U.S. banking sector in global carbon emissions:
The financial industry plays a critical role in the historic transition to a low-carbon economy. We take this responsibility to our clients, our investors, our employees -- and our world -- seriously. More than $3 trillion now flows into sustainable investment products each year as our industry works to shape investor behavior. Financial institutions were heavily represented at the COP26 UN Summit last month in Glasgow, and have led the way on sustainable initiatives like scaling voluntary carbon markets and calling for a carbon tax.
In the coming decades, the global race to meet the goals of the Paris Agreement will require banks to intermediate tens of trillions of dollars in investment to fund green technologies, industries, business, entrepreneurs, jobs, and sustainability-supporting capital formation.
The financial industry will continue to support ambitious climate transition pathways for our clients, but this transition cannot happen overnight. A just transition, which takes into account the dislocation to communities, families, industries and workers, will take time.
That said, this report is based on a flawed premise that banks should be held responsible for the CO2 emissions of the industries they do business with. While financial institutions take seriously their responsibility to help clients in their own transitions, they are not directly responsible for the emissions of their client firms – or the quality of their disclosures. Banks cannot, and should not, play the role of climate police. It is the unique role of governments to enact policies that reduce the demand for, and the supply of, carbon-intensive activities, industries, services and products.
We continue to call on the public sector to develop such policies in a manner that is consistent, coherent and coordinated across political party lines, industries and firms, and harnesses the power of market-based solutions, such as putting a price on carbon. We also urge policymakers to enact evidence-based climate change legislation that prioritizes economic growth and stability for consumers and workers. We look forward to continuing an open, honest dialogue with policymakers and regulators to advance the discussion at this critical point in the energy transition.
More from the IIF on these topics:
About the Institute of International Finance (IIF)
The Institute of International Finance (IIF) is the global association of the financial industry, with more than 400 members from more than 65 countries. Its mission is to support the financial industry in the prudent management of risks; to develop sound industry practices; and to advocate for regulatory, financial and economic policies that are in the broad interests of its members and foster global financial stability and sustainable economic growth. IIF members include commercial and investment banks, asset managers, insurance companies, sovereign wealth funds, hedge funds, central banks and development banks. To learn more about IIF, please visit www.iif.com, follow us on Twitter, LinkedIn or YouTube, or check out IIF’s podcasts.
###