Banks, insurers launch ‘Climate Principles’
London, 4 December: Five leading financial institutions have signed up to the Climate Principles, guidelines to deal with the risks and opportunities posed by climate change. But the principles’ convenors, NGO the Climate Group, conceded that initial take-up was not as wide as hoped, blaming the financial crisis.

Banks Crédit Agricole, HSBC and Standard Chartered are joined by reinsurers Swiss Re and Munich Re in signing up to what the Climate Group describes as “the first comprehensive industry framework” to address climate change.

“Signatories will incorporate carbon and climate risk into their research activities and investment decisions, engage with clients to understand climate risks and opportunities, and develop products and services that support them in managing those risks and exploiting those opportunities,” said Francis Sullivan, deputy head of group corporate sustainability at HSBC and chairman of the Climate Principles.

The principles require signatories to consider the climate impacts of their investments, and request that recipients of project finance disclose greenhouse gas emissions.

They will also be expected to disclose progress on their activities – and the Climate Group, which will act as secretariat to the principles, will report on progress made each year.

However, the Climate Principles will not require signatories to turn away business – unlike the Equator Principles, voluntary guidelines on social and environmental risk in project finance.

“Signatories will be taking risks and opportunities into account, and will be required to demonstrate they’ve done that,” said a Climate Group spokeswoman.

She added that NGO had hoped that all institutions involved in the principles’ development would sign up, “but we recognise that for many reasons, including the current economic climate, this was not possible at this stage".

“We are continuing to work closely with the wider group of financial institutions involved and hope that many will be in a position to adopt The Climate Principles in the next 12 months,” she added.

No US banks committed to the principles. Emily Farnworth, director of corporate leadership at the Climate Group, noted that “decision-making in US banks can be quite a long process, and was halted when the US was the first to be hit by the economic crisis. For these reasons, US banks were not part of the first wave of adopters. However, US banks will continue to be engaged in the evolution of The Climate Principles.”