Climate Group rebuts attack on Climate Principles
London, 9 April: The Climate Group has hit back at claims that the Climate Principles are “meek” or “window dressing”, but acknowledged that “more action” is required from the finance sector to tackle climate change.

Last week the NGO network BankTrack released a report which eviscerated the two main efforts by the financial sector to address the impacts of lending on the climate: the Climate Principles, a voluntary framework for global financial institutions, and the Carbon Principles, meant to inject carbon analysis into decisions on financing US power plants.

The Climate Group, secretariat of the Climate Principles, acknowledged “that more action from the finance sector is required”, but disputed some of the main claims in the BankTrack report.

The NGO said that both the Carbon and Climate Principles put too much emphasis on considering the risk climate change and carbon regulation pose to financiers, meaning “it is often not clear that the Climate and Carbon Principles prescribe any action that would differ from business as usual”.

But the Climate Group said: “If addressing climate change risks and making the most of the opportunities was currently business as usual for the finance sector, we would not have bothered with this initiative. The reality is that financial institutions taking a leadership role on tackling climate change are few and far between.”

“Those organisations adopting the Climate Principles have made a public commitment to playing their role in accelerating a low carbon economy – our hope is that others in the sector follow the same path,” the group added, in a statement.

BankTrack also criticises the principles for failing to set performance indicators which would allow stakeholders to track how well signatories are delivering on their promises. However, the Climate Group said that working groups are developing disclosure requirements which should allow third parties to track implemention – with the initial focus on insurance, corporate banking and project finance.

And the secretariat is conducting its own review of implementation, which it expects to publish by the end of 2009, the Climate Group added. “We will then seek to make best practice common practice where it makes sense and work harder at tackling the issues that need further attention.”

BankTrack also criticised the principles for failing to encourage a move away from financing industries with a high carbon impact, including coal, oil and gas.

But the Climate Group said: “Shifting to a low-carbon energy mix is essential but it is unrealistic to think that this can happen overnight. The key is minimising carbon emissions from sectors that are currently carbon intensive and stimulating the clean technology market.”

“The group also acknowledges that governments play an important role in accelerating this process,” it added.