fbpx ...

Powering Net Zero Commitments

Ex-Bank of England boss states that banks should link executive pay to Paris climate goals

Former Bank of England governor Mark Carney has stated that banks should link executive pay to climate risk management, in a bid to align the finance industry with the Paris Agreement goals.

He stated this at the UN Environment Programme Finance Initiative roundtable this past Tuesday, saying lenders should at the very least become transparent over whether pay is tied or not tied to climate targets.

Additionally, Carney stated that banks need to “have some interim objectives and targets that are disclosed. Ideally, a governance process that’s clear in terms of … specific board-level governance and responsibility around managing climate risks and opportunities. Ideally, [there should be] some compensation link to that as well, or at least disclosure about whether it is there or not.”

Whilst a number of larger banks have announced their commitment to net-zero emissions in recent months, only a small number of them have been explicit on how much influence executive remuneration plays a part in ensuring the lenders are accountable.

JP Morgan and HSBC both revealed climate pledges over the last week, with HSBC committing to achieving net-zero emissions by 2050. This pledge was linked t the services and loans it provides to its clients. This announcement came days after JP Morgan made a similar pledge, stating that it would push clients towards operations that aligned with the Paris agreement.

Barclays announced plans earlier in the year to cut down its carbon footprint to net zero by 2050 earlier and Lloyds committed to halving carbon emissions supported by its personal and business loans by 2030.

Neither Llyods nor HSBC confirmed if executive pay was to be linked to their respective climate targets.

JP Morgan stated that the bank would announce its methodology in the spring, also reiterating that it hasn’t ruled out linking pay to climate pledges.

NatWest Group has confirmed that pay for its top-ranked executives, including chief executive Alison Rose, do in fact take climate targets into consideration. The bank made a commitment to completely phase out coal financing in 10 years. It also stated that it aims to halve the climate impact of its lending activity by 2030.

The yearly report from Barclays showed that lowering global carbon emissions was one of the 16 requirements which help determine about 20% of executive bonus pay.

Nevertheless, Johan Frijns, the director of BankTrack. Which is an organisation that monitors the financial sector has stated that executive pay should just be one of the ways banks are encouraged to avert a climate catastrophe. “It would be a severe mistake to try to steer bank decision-making on reducing their climate impact solely through getting the right financial incentives or disincentives in place for individual bankers.”

“If internal motivation to stop financing climate destruction were that shallow we wouldn’t stand a chance. That said, tying executive pay to, say, delivering a credible phase-out plan from the fossil fuel industry, or achieving a steep decline in financed emissions, may well knock a few heads together,” Frijns also added. As reported by The Guardian

Share this article on your social networks

Related Posts

Greenhouse Gas Emissions by Country: Understanding the Global Impact
Greenhouse gas emissions by country: Understanding the global impact. In this article, we will take a closer look at the ...
Read More
GHG Reporting: Understanding and Mitigating Greenhouse Gas Emissions
Greenhouse gas (GHG) reporting is the process of measuring, reporting, and ultimately reducing an organization's emissions. In this article, we ...
Read More
5 key takeouts from the new IPCC Climate Report
The most recent 3.675 pages IPCC report has been hailed as the most searing indictment of the planet’s climate predicament. ...
Read More
Overwhelming majority of Australians look to Brands to make a climate difference
The research, released today at Nine’s State of the Nation Sustainability virtual event, showed that despite everyday Australians making changes ...
Read More
67% of retail investors now prefer ESG investments
According to new research from behavioural finance experts, Oxford Risk, two out of three retail investors are considering transferring their ...
Read More
Massive and rapid swing. 75% of Australian businesses leaders believe world is at climate change tipping point: Deloitte Report
Australian business leaders are becoming a lot more concerned about climate change. This shift is according to a new report ...
Read More
Climate Impact Measurement and Disclosure Growing Quickly Among Businesses
Many of the world’s biggest organisations have begun to share information concerning their carbon footprint in a new move that ...
Read More
Explosive research for Australian businesses: people are turning down high paying jobs for 1 surprising reason
employed by a company that did not do its part to address climate change.
Read More
Australia Ranks Last Out Of 60 Nations For Climate Crisis Response Policy
Australia’s government policy response to the climate crisis was ranked last in an assessment of 60 nations released at the ...
Read More