“What are not accounts, are the stories”, says an adage frequently applied to the financial world, much given to launch strategic plans with objectives, theoretical and little concrete. In the fight against climate change the initial position of the banking sector, after the Paris Agreement of 2015, was not enthusiastic. In fact, some entities considered that the banks were not at the epicenter of this problem because it affected the heavy industries.
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however, the situation has changed drastically from 2018 and above all, in 2019. This issue, with many implications, has come down to the domes directives of the largest Spanish banks, which have begun to worry about how to transform the credit portfolio brown (polluting companies) in loans to green (of firms whose activity respects the environment). Despite this difficulty, they are convinced that the area of loans, green will be one of the most growth in the next few years by the great transformations that are needed and the push to the public that will. The latest report from Bloomberg NEF shows the increasing profitability of renewable energy, which in many countries are becoming the cheapest form of producing electricity.
From the point of view of financial security, the supervisors have asked the entities to analyze their risk with the polluting companies because each time will have more difficulties to move forward and may become delinquent.
According to the Bank of Spain, the exposures of Spanish banks to the branches potentially exposed to the risks of energy transition, although with different degrees of intensity, representing 20% of the portfolio of loans to productive activities. That is to say, the size of the problem is not negligible. The bankers are aware that they are losing part of their business and claim independent agencies in qualifying companies by its activity to the climate to retrofit its loan portfolio. But are you aware that part of your portfolio is brown (companies of coal, oil refineries, chemical, for example) but ask for time to finish with these loans because they are granted medium-or long-term, and not may be terminated from one day to another.
According to sources of the Spanish Banking Association (AEB) and of the ECSC, the employer of the old savings bank, “the agreement signed by the banks collects within a maximum period of three years, the entities to have established and published the specific objectives of the sector, based on scenarios for the alignment of the portfolios with the objectives of the Paris Agreement”.
This step, criticised by environmental organisations for its long-term, not supposed to fund, so from now on, more companies brown. Santander, for example, despite having a great presence as a bank in Poland, a country that uses a lot of coal, says: “It is not financed any new project nor do we allow clients to develop coal, including nuclear power plants”. The Santander and the BBVA are among the 33 banks that more credits are given to companies that burn fossil fuels, according to Banktrack, formed by different NGOS, if well-contained in recent posts.
On the positive side, the financial sector considers that the society would not allow them to remain part of the problem of climate change, that is to say, they can enhance their battered public image. In terms of credit growth, since AEB and ECSC are reminded that according to calculations of the European Commission, the EU has to address a shortfall in annual investment of nearly 180,000 million to achieve the objectives in the field of climate and energy until 2030. In this game, the dealer is the key piece, but is aware that it will be able to place public loans if you do not stop supporting polluting industries.
“The banks”, say these sources, “to the end of 2020, it is proposed to publish and implement a set of measures, that will be in permanent dialogue with its customers, to support change towards technologies, business models, and societies low-carbon and resilient to the climate. Each entity, in addition, report annually on their progress individually and every two years on the collective progress achieved in the development of this commitment.” Are aware that they can not fail to society because they are a key piece in this issue.Updated Date: 20 January 2020, 13:00