Introduction

Institutional investors express frustration at financial institutions’ retreat from net zero ambitions

Institutional investors are expressing frustration at the apparent retreat by the financial sector from the net zero emission goals proclaimed at the COP26 UN climate conference in Glasgow in late 2021. Members of the Net-Zero Banking Alliance have voted to abandon their commitment to aligning financing activities with the Paris Agreement's 1.5℃ global warming target, in response to the withdrawal of large US, Canadian and Japanese banks and the hostile stance of the US administration toward climate protection measures. The decision has prompted the Netherlands' Triodos Bank to quit the organisation, saying the easing of membership requirements is a step in the wrong direction. The group's impact investment subsidiary, Triodos Investment Management, has criticised the EU's decision to delay and water down the provisions of the Corporate Sustainability Due Diligence Directive in the name of protecting the competitiveness of European companies. Elsewhere, New York City comptroller Brad Lander has warned asset managers that they must provide credible transition plans aligned with the city's 2040 net zero emissions goal by a deadline of June 30 or risk losing mandates from its public pension funds, pointing to BlackRock's withdrawal from the Net Zero Asset Managers initiative.

Net-Zero Banking Alliance members vote to abandon 1.5ºC global warming ceiling target

Members of the Net-Zero Banking Alliance have voted to abandon their goal of aligning their financing activities with the Paris Agreement target to limit global warming to 1.5℃ above average pre-industrial era temperatures. They will now aim to keep warming to well below 2℃, while continuing to seek to achieve the original 1.5℃ target, although this seems increasingly out of reach. The United Nations-backed organisation justifies the change as giving banks greater flexibility, given that the decarbonisation transition in the real economy, governments' climate policy and technological advances have not taken place at the pace envisaged in 2021. Many large US, Canadian and Japanese banks have recently quit the alliance, prompting a review of its membership rules and commitments.

Best source: Reuters (free registration)

See also: Finimize

Lobbying has weakened Corporate Sustainability Due Diligence Directive: Triodos Investment Management

Lobbying by business interests appears to have succeeded in weakening the EU Corporate Sustainability Due Diligence Directive, according to Rosl Veltmeijer, a portfolio manager at Netherlands-based Triodos Investment Management. The directive approved in April 2024 required companies to begin reporting on and addressing environmental and human rights breaches in their supply chains from 2027, but it has been watered down as part of the European Commission's efforts to reduce the regulatory burden on businesses, Veltmeijer says. Companies will be required to report only on their direct suppliers, rather than on deeper sub-contractor layers where wrongdoing may in future not be identified. The frequency of monitoring the adequacy and effectiveness of each company's due diligence processes has also been extended from one to five years, and companies with fewer than 1,000 employees have been exempted entirely.

Best source: Triodos Investment Management

Italian government says UniCredit has insufficient control and cannot enforce policies at Russian business

As a condition of its approval of UniCredit's bid for rival Banco BPM, the Italian government is insisting that UniCredit disposes of its Russian business to avoid the risk of its activities bolstering the country's economy. UniCredit has reduced its exposure to Russia but rule changes on foreign-owned companies by Moscow have made it extremely difficult to sell the remainder of the business, the group says. The Italian government argues that UniCredit has insufficient control over its operations in Russia, which its executives have been unable to visit since the outbreak of war in Ukraine in February 2022, and that it cannot enforce group policies.

Best source: Reuters (subscription required)

Sabadell CEO calls for regulatory measures to minimise impact of possible acquisition by BBVA on SMEs

Banco Sabadell CEO César González-Bueno has urged Spain's Comisión Nacional de los Mercados y la Competencia to ensure that BBVA maintains the bank's share of credit to small and medium-sized businesses if it acquires the Alicante-headquartered group. He has also suggested structural measures such as requiring the sale of certain business units to preserve competition, as well as a five-year period in which the putative combined group would be required to keep credit levels stable for SMEs. González-Bueno has also voiced criticism of BBVA, claiming a lack of transparency in its talks with the regulator, arguing that the group's proposed commitments are inadequate to cover Sabadell's existing SME clients.

Best source: Cinco Días (in Spanish, subscription required)

Women earn significantly less at EU banks and investment companies: European Banking Authority

A significant gender pay gap exists at EU banks and investment companies, with women earning substantially less than men in 2023, according to the European Banking Authority's Report on Remuneration and Gender Pay Gap Benchmarking. The authors say female staff in banking institutions earned 24.48% less than their male counterparts, with investment firms reporting a gap of 32% – differences attributed to the under-representation of women in higher-paid positions. The EU regulator says it is revising its internal governance guidelines to improve monitoring of gender-related disparities.

Best source: European Banking Authority

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