Exclusive banks vote to limit the accounting of emissions in the sources of the sale of bonds and shares

LONDON (Reuters) - Banks working to develop global standards for accounting for carbon emissions when underwriting bond or stock sales have voted to exclude most of those emissions from their own carbon footprint, three people familiar with the matter said.

A majority of banks comprising an industry task force backed a plan earlier this month to exclude two-thirds of the emissions associated with their capital markets business from being credited in carbon accounting, the sources said, after months of wrangling over the matter.

If upheld, the ruling would pit the banks against environmental advocates, many of whom argue that the banking sector should take full responsibility for emissions generated by activities financed through bonds and equity sales, as it already does for loans.

Nearly half of the financing provided by America's six largest banks to top fossil fuel companies came from capital markets, not direct loans, between 2016 and 2022, according to the environmental group Sierra Club.

Accounting for these emissions by banks will affect their goals to become carbon neutral. The major lenders have pledged to reduce their emissions to zero on a net basis by 2050 and have set rolling targets for the decade.

Banks with large capital markets operations argued in the task force that they should take responsibility for only 33% of emissions from activities financed through bonds and equity sales because they do not have the same control over borrowers as they do with loans. Banks have also raised concerns about capital market-related issuance exceeding their loan-related issuance, the sources said.

Those pushing for a low accounting threshold argue that taking responsibility for 100% of emissions would lead to double-counting across the financial system, as investors in bonds and stocks will also separately account for some of the emissions generated by financial activities in their own carbon. tracks.

Most banks in the task force supported the 33% limit, but at least two disagreed, with one advocating 100%, the sources said, requesting anonymity because the proceedings were confidential.

The accounting standard will not be mandatory. The Partnership for Carbon Accounting Financials (PCAF), an association of banks working to harmonize carbon accounting across the industry, has formed a task force made up of major banks in the hope that others will follow the emerging standard.

The PCAF board will now have the final say on whether to accept the 33% accounting stake for Capital Markets. Two of the sources said no decision had been made but were reluctant to overrule the task force.

A spokesperson for PCAF did not respond to a request for comment.

Working group members include Morgan Stanley, Barclays, Bank of America Citigroup, HSBC, BNP Paribas, NatWest and Standard Chartered. Officials from all but two either declined to comment or did not respond to requests for comment.

A Barclays spokesman said the bank supported the PCAF's work on setting emissions standards and declined to comment further. A spokesman for Standard Chartered said the bank was comfortable with any threshold for accounting for emissions and declined to comment further.

Sources said the PCAF was frustrated with how much energy was being spent on arguing over the correct number and believed any percentage was better than further delay. The publication of the final PCAF methodology has been delayed since last year due to disagreements

BUDDLING OF EMISSIONS

Campaign group ShareAction said the 33% weight was "plucked out of thin air".

"PCAF has a responsibility to publish guidelines that will enable a transparent and unbiased assessment of banks' climate risks and impacts," said head of research Xavier Lerin.

It is not yet clear whether banks will have to merge their capital market-related and credit-related emissions into one target or separate them.

One of the sources said having one target but two accounting approaches for different emissions could prove challenging.

The Science Based Targets Initiative, an independent body backed by the United Nations and environmental groups, is in the process of developing net-zero standards that will include whether banks should have different or combined targets

A groundbreaking initiative has emerged in the financial sector as exclusive banks come together to tackle the pressing issue of accounting for emissions when selling bonds and shares. The move is set to shape the future of sustainable investing and is gaining momentum across the industry. According to reliable sources, these elite banks are voting to introduce measures that will have far-reaching consequences for environmental responsibility and financial markets.

Interesting details:

Definition of exclusive banks:

Before we get down to voting, it's essential to understand what "exclusive banks" mean. These are financial institutions renowned for their selective clientele and first-class services that are known to have considerable influence in the global financial landscape.

Vote for environmental responsibility:

According to reliable sources, an unprecedented coalition of exclusive banks has met to discuss measures that will limit the accounting of issues in the sale of bonds and shares. The move is in response to growing concerns about climate change and the role of financial institutions in mitigating environmental impacts.

Green investment wave:

The ongoing global shift towards sustainability has intensified the focus on green investment. By limiting the accounting of emissions when selling bonds and shares, these exclusive banks aim to strengthen sustainable financing and redirect capital to environmentally friendly projects.

Implications for corporations and investors:

The potential introduction of emissions accounting restrictions will have significant consequences for businesses and investors. Companies with strong environmental records may gain a competitive advantage in attracting investment, while companies with inadequate environmental practices could face problems accessing capital.

Working together for a greater cause:

The vote of these exclusive banks is an example of the power of cooperation in solving critical problems. By coming together, these influential financial institutions signal a united commitment to combat climate change and support a greener financial ecosystem.

Impact on Market Sentiment:

As news of this exclusive bank ballot initiative spreads, it is likely to affect market sentiment and attract the attention of investors, regulators and environmentalists. Anticipation of potential changes to emissions accounting practices may cause ripples in financial markets.

The move by exclusive banks to vote on limiting emissions accounting when selling bonds and stocks represents a pivotal moment in the world of finance. This action has the potential to change the way financial institutions approach environmental responsibility and sustainable investment practices. As the world watches closely, the decisions made by these elite banks will undoubtedly have a lasting impact on the global financial environment and the fight against climate change.

In a breakthrough move, leading exclusive banks recently voted to limit emission accounting when selling bonds and stocks, according to trusted sources. This decision represents a major milestone in the financial industry's efforts to address climate change and promote sustainable investment. Read on to find out key details about this exclusive bank vote and its potential impact on the global financial environment.

Main Body:

Why the Exclusive Banks Vote Matters:

The decision of exclusive banks to limit the accounting of issues in the sale of bonds and shares is of great importance due to their significant position in the financial market. These exclusive banks cater to high net worth individuals and corporations, making their actions impactful across sectors. By voting to limit emissions accounting, they are setting a precedent that can potentially spur other financial institutions to follow suit, thereby accelerating the transition to a low-carbon economy.

Addressing climate change through financial instruments:

As climate change becomes an increasingly pressing global issue, the financial industry plays a vital role in the fight against environmental issues. By limiting the accounting of emissions when selling bonds and shares, exclusive banks demonstrate their commitment to supporting environmentally responsible investment practices. The move aims to direct capital to companies with a lower carbon footprint, promote sustainability and encourage businesses to adopt greener practices.

Strengthening investor confidence:

The exclusive bank vote also aims to boost investor confidence by ensuring greater transparency and accountability when it comes to carbon emissions. As clients become more environmentally conscious, they seek to invest in assets that align with their values. By limiting emissions accounting, these banks position themselves as leaders in offering socially responsible investment opportunities that can attract a wider clientele.

Cooperation with sustainable organizations:

Reports indicate that these exclusive banks have worked with renowned sustainability organizations and climate experts to design a robust framework for curbing emissions accounting. This suggests a proactive approach to research and consultation, which increases the credibility and effectiveness of their decisions. The involvement of experts also strengthens the commitment of banks to base their activities on reliable data and expertise.

Potential challenges and criticisms:

While the exclusive banks' vote has received praise from environmentalists and sustainable finance advocates, it may face challenges and criticism from other sectors. Some stakeholders may argue that limiting emissions accounting could limit investment opportunities and lead to reduced returns. Addressing these concerns through transparent communication and demonstrating the long-term benefits of sustainable investment will be critical to banks' success in implementing this decision.

The exclusive banks' vote to limit emissions accounting when selling bonds and stocks represents a significant step towards a more sustainable and environmentally responsible financial system. By prioritizing climate-friendly investment practices, these banks are setting a positive example for the entire industry. This move not only boosts investor confidence, but also sends a strong message to businesses around the world to prioritize sustainability in their operations. As the implications of this decision unfold, the financial world is eagerly anticipating the transformative impact on the fight against climate change.