Consumers and governments are putting increasing pressure on financial institutions to take climate action and drive the pursuit to net zero.
Consumers are demanding banks stop investing in assets linked to fossil fuels and deforestation. And many are asking for the first time, “How sustainable is my bank?”.
Regulation around sustainability reporting has also gained momentum. The mandatory ESG (Environmental, Social, and Governance) reporting requirements and political pressure around carbon mitigation have affected the banking industry.
The urgency for banks to take action is increasing. Banks need to adopt sustainability in their processes and operations and commit to achieving net zero by 2050.
Put simply, net zero means that the total greenhouse gas (GHG) emissions of an organisation (or city or country) are equal to or less than the emissions it removes from the environment.
While carbon neutral and net zero have similar meanings, there are small but important differences between them.
Crucially, net zero refers to all greenhouse gases (carbon dioxide, methane, nitrous oxide, etc.), whereas carbon neutral only refers to carbon dioxide.
For example, a company is carbon neutral if the amount of carbon dioxide it emits is the same as or less than the amount of carbon it removes from the atmosphere.
Climate change is the biggest threat facing humanity. The rate at which we are emitting greenhouse gases is unsustainable and could be irreversible if we don’t act immediately.
If global temperatures continue to rise, we will experience extreme weather conditions and biodiversity loss.
To stop global warming, net zero must be achieved at a global level. It must also be permanent, meaning that any greenhouse gases removed from the atmosphere are not re-released.
While individual action is crucial, businesses and governments must drive action to help society transition to net zero.
Since the adoption of the Paris Agreement (2016) and the release of the IPCC report, a growing number of countries have committed to net zero emissions targets.
More than 70 countries, including the biggest polluters—China, the United States, and the European Union—have set a net zero target, covering about 76% of global emissions.
Over 1,200 companies have set science-based targets in line with net zero, and over 400 financial institutions have joined the Race to Zero, pledging to take immediate and rigorous action to halve global emissions by 2030.
First, banks need to get clear on their sustainability strategy and develop an action plan to deliver it. It’s important to determine the business model and tech required to achieve the sustainable goals, define a value proposition and examine the company culture to identify how best to embed sustainable initiatives across the business.
The world needs trillions of pounds of investment to meet the goals of the Paris Climate Agreement. This investment needs to be financed by banks. So a core part of banks’ sustainability strategy needs to involve investing in funds that help advance innovative carbon-efficient technologies and supply chains.
Banks will need products and processes to support green investments and initiatives, such as Green Loans, Green Project Finance and Green Bonds.
Banks can also empower their customers to measure, reduce and offset their carbon emissions by integrating carbon management products into their mobile banking apps.
Our research revealed that 75% of customers want to understand the environmental impact of their spending, so this is also a key opportunity for banks to attract conscious consumers.
Businesses can reduce paper waste and carbon emissions by digitising operations, it will help reduce costs as well.
Cogo is all about finding sustainable solutions to help businesses and consumers better understand their contribution to climate change.
Our Personal Carbon Manager enables customers to measure, reduce and compensate for their carbon footprint. Using credible data mapped to specific spend categories, you can empower and ethically 'nudge' your customers to take real action and reduce their carbon footprint.
If you want to achieve net zero emissions and be on the right side of history, alongside some of the world’s biggest banks, then get in touch today.