ISSB may seek disclosure about bank’s emissions financing activities

Kristina Wyatt reports in this note:

The International Sustainability Standards Board (ISSB) released the agenda and staff recommendations to be deliberated at its December meeting. Perhaps the most consequential of the staff recommendations coming out of the meeting is a change to the disclosure requirements for financed emissions: financed emissions disclosure requirements for asset managers, commercial banks, and insurers would be moved from Appendix B of the climate-related disclosures rules into the main body, effectively making them required from the get-go. Such a change, if adopted, would significantly increase the pressure on financial institutions to manage their scope 3 emissions on an accelerated timeline. The staff recommendations do carve out an exception for facilitated emissions—those resulting from investment banking and brokerage activities—citing a lack of accepted calculation methodologies.

Meanwhile, David Carlin reports in this note:

A new report by ShareAction supports feedback from the European Central Bank and others that Europe’s banks are not adequately prepared for climate change and nature-related risks. Furthermore, the financial activities of many of these institutions are contributing to continued emissions and ecosystem destruction. Key findings:

1. Banks are not reflecting identified climate risks in their critical risk management processes.

2. Banks are now more transparent in their financing to climate-sensitive sectors and financed emissions. But they aren’t disclosing the true extent of risks and impacts.

3. Banks’ green finance strategies leave room for greenwashing.

4. Banks are only just starting to identify biodiversity-related risks, opportunities, impacts, and dependencies. Very few integrate biodiversity into key risk management processes.