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Carbon-Neutral Banks ‘Aren’t Greener’

Banks are fooling investors and the public with false claims of carbon neutrality, according to a report from carbon data publishing site Ecodesk.

In the Sustainability & Finance report, Ecodesk says that companies purchasing carbon credits are “buying their way” into a perception of sustainability, and that those banks claiming to be carbon neutral are no greener than their competitors.

Not only does this greenwashing mislead consumers and investors, the report says, but it prevents the banks from implementing real efficiency and environmental programs that could save them millions of dollars.

The report analyzes the world’s top 30 banks by turnover, including Bank of America, Wells Fargo, HSBC, Barclays and RBS, comparing those who say they are carbon neutral with those who do not have a carbon neutral strategy. To qualify for the study, all participants must have an active and well-developed environmental sustainability strategy.

The banks studied collectively spent over $50 million on carbon credits.

Ecodesk CEO Robert Clarke said carbon neutrality is misleading to investors because it implies that companies have taken every reasonable route to carbon efficiency. But the study found that companies have not taken these steps.

The only notable exception was National Australia Bank (NAB), which uses the carbon price and the purchase of credits to drive eco-efficiency programs company-wide, the report said.

Banks that say they have gone carbon-neutral in recent years include TD Bank, BMO Financial Group – which were not big enough to be included in the Ecodesk report – and Danske Bank Group, which was included.

This week the Newsweek Green Rankings found that financial companies are among the most sustainable in America.

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3 thoughts on “Carbon-Neutral Banks ‘Aren’t Greener’

  1. I would question whether SRI investors are actually mislead by carbon neutral claims. In my experience, they are a sophisticated bunch.

    Banks, like any organization, ought to undertake all commercially reasonable measures to minimize the environmental footprint of their operations.

    But banking institutions are unique in that they have significant leverage over the behavior of -other- organizations through the standards they use to supply credit and make other financial commitments.

    It is here that banks have the opportunity to have their greatest impact, and where some, such as Citigroup, Well Fargo and Bank of America have distinguished themselves by setting public targets for financing sustainability related projects.

  2. Exactly true. Nedbank in South Africa markets itself as the “green bank” and has also just achieved “carbon neutrality” by buying carbon offsets. So, not only is it misinforming its clients, it’s also using their fees to pay for the hubris!

  3. I have to agree with David. It is ridiculous to conclude that SRI analysts/investors are being hoodwinked by companies being carbon neutral. In addition, it is equally ignorant to claim that these companies are sacrificing reducing their footprints (ie – reducing energy use and reducing their own costs) by also having carbon neutral goals. All in all a great way to steer companies away from pursuing any type of sustainability agenda at all by publicly flogging those that at least do something.

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