As New York is hosting the eleventh annual Climate Week, it is profoundly disappointing that very modest progress has been made on climate change over the past decade.
There is a clear sense of urgency for CEOs to collectively call for meaningful change on the biggest issues facing Americans. Whether it is the public health crisis of gun violence or the issue of minimum wage, there has never been a more significant time for corporations — especially financial institutions — to provide leadership on proven solutions.
As the CEO of Amalgamated Bank, we are doing our socially responsible part and we intend to do more.
Climate change is bad for business and for the economy. It will disrupt housing markets, shape the labor force, drive immigration trends, exacerbate economic inequality and present threats to a well-being society that we have only begun to consider. Solutions to climate change will ensure businesses and clients are not saddled with this real, imposing threat moving forward.
The financial industry has a critical role to play in helping to limit the effects of global warming, given the central role it has in global economies and societies.
Banks and financial institutions have the power to drive investment in and growth of new technologies and solutions to climate change. On the flipside, the banking sector could continue — as they have been since the Paris Climate Agreement — to finance industries that contribute to global warming. Last year, emissions increased at their fastest rate in seven years and the odds of the world meeting the goals of the Paris Climate Agreement are in jeopardy.
The first step in limiting contributions to global warming is to understand the carbon impact of investments. Measuring a bank’s carbon footprint enables it to manage its portfolio, further understand climate risk and set targets that align with the Paris Climate Agreement. There has not yet been an easy way to do this work, but there are new tools on the horizon.
More than 50 financial institutions from around the world recently announced a partnership to standardize carbon accounting for the global financial sector. The Partnership for Carbon Accounting Financials, or PCAF, is an industry-led coalition to help financial institutions take concrete actions to align their activities with the goals of the Paris Accords.
The PCAF has created an open source tool that will allow banks to identify their own emissions and the emissions created by their portfolio of investments. This set of standards for carbon accounting is designed to be accessible for banks and financial institutions around the world, of every size and with investments at every scale.
By enabling the measurement of banks’ carbon impact, the PCAF will allow the industry to take concrete steps to actively mitigate its climate impact, from reporting to planning investments in sustainable industries.
Embarking on the next 10 years of work, banks will be a part of the solution.
Amalgamated is building the PCAF to expand in partnership with banks worldwide. It is the bank’s hope that it will have a broad influence on the very important financial sector of the economy. Measuring, reporting and acting to reduce climate change is not only good business, but it is the financial industry’s obligation to its clients and communities.
Don’t let the last decade dictate the next. The industry cannot afford to let modest and slow be the pace of change. Climate change needs bold action. Amalgamated and the global partners in this initiative are pledging bold action and look forward to other banks joining.