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 Banking, like insurance, is being directly impacted by climate change. With the onset of carbon legislation banks have to be much more careful when financing projects that have high carbon emissions like coal fired power plants. This poses significant reputation as well as financial risks in every new project. Litigation risk as a result of being seen to be working to increase the rate of climate change should also not be ruled out. The impact of carbon emissions legislation in the USA and other countries will have a significant impact on the profitability of new ventures through carbon taxation and thus banks will see their own profitability impacted. Often internally banks have extensive direct emissions from their business as a result of significant travel and sprawling offices and branches. Not attending to this can create reputation risk and the impression that these key backbones of our financial services do not share the same values as their clients.
Opportunities:
Although some banks seem paralyzed by the existing financial recession and concerns over funding high carbon emissions infrastructure projects in the wake of carbon emissions legislation, forerunners are finding new opportunities. Banks are beginning to maximize investment return through energy and resource efficiency opportunities and capitalize on increasing demand for renewable energy sources by financing such projects. By turning their attention to the financing of energy and resource efficiency assets, banks are aligning themselves with government policy that encourages spending on renewable resources and bolsters international country commitments through Kyoto. Banks, like HSBC are putting their money where their mouth is internally by becoming the first bank in the world to be 100% carbon neutral.
GCX Services: What we can do
Efficiencies – GCX will assess your companies’ carbon emissions through a carbon footprint and a business case energy efficiency audit. The next step is to reduce your carbon emissions by working with you to set targets and budgets and then implement reductions and achieve cost cutting goals. Reductions include Education campaigns to ensure that your employees support internal initiatives. GCX will also monitor your emissions on an ongoing basis. As you embark on the journey to become a low carbon emission business you can gain significant marketing and PR traction and differentiate your brand as a climate change leader.
Increase Competitiveness – GCX will help you to identify lending opportunities in renewable energy infrastructure projects so that you can take advantage of this growth segment. Work together with GCX to ensure that the assets you finance are not high emissions assets and will not lead to financial risk and reputation associated with carbon legislation. Create new products to stimulate renewable energy financing products for all levels of business and residential and differentiate your bank as a climate change leader. GCX offers our banking clients the opportunity to reduce risk inherent in their portfolio of customers through a detailed insight into the impact of climate change on countries, industries and sectors. GCX can look at any segment of your business and help you to create new products aimed at reducing risk for both you and your customers.
Adaptation - Adaptation is the adjustment in systems in response to actual or expected climatic events or their effects, which moderates harm or exploits beneficial opportunities. GCX will look carefully at the impact that climate change will have on the market sectors that you lend money to. Examples of high risk industries include mining, transport, tourism, agriculture, oil and gas and residential properties. This will allow you to identify the physical, legal and reputation risks to these sectors and to structure financial products that take these risks into account. By doing this you provide added value to your customers and can advise them on how best to reduce their own risk as well as yours due to the impact of climate change.
Legislation and Reputation – GCX will determine the impact of legislation on your business and how best to respond to ensure that your profitability is not impacted. This includes determining the reputation risks exposed by being associated with high carbon emissions businesses. GCX will help you to identify high risk assets and sectors and green field opportunities. We will also help you to drive policy through access to our extensive industry based research.
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