Finance sector called Britain’s ‘dirty secret’ on climate change

Greenpeace says banks and investors are responsible for nearly double the UK’s annual carbon emissions

Global CO2 emissions need to fall by 45 per cent by from 2010 levels by 2030 to limit the worst effects of climate change. Bloomberg

Britain’s finance sector is responsible for more carbon emissions than most countries, according to a new study by WWF and Greenpeace UK.

The study found that banks and asset managers invested in projects that caused 805 million tonnes of CO2 in 2019 – nearly double the UK’s annual net emissions.

The two conservation bodies said the findings would rank the City of London, the capital’s financial district, as the ninth biggest emitter in the world if it was a country.

They said research pointed to the sector being one of the biggest UK contributors to climate change and called on the government to legislate so it is aligned with the carbon-cutting ambitions of the 2015 Paris climate accord.

"Trying to set a path to net-zero emissions without tackling the UK financial sector is like sticking a plaster when the patient needs open heart surgery,” said WWF UK's chief executive, Tanya Steele.

The sector is one of the biggest drivers of the UK economy and contributed £132 billion ($186.755bn) in 2019, representing 7 per cent of total economic output. Exports of UK financial services in that year were worth £60 billion.

The international panel on climate change says that global emissions need to fall by 45 per cent by from 2010 levels by 2030. That will be the first stage to keeping global temperature rises to 1.5°C above pre-industrial levels and prevent the worst effects of climate change.

But the world’s largest 60 banks alone have provided $3.8 trillion to the fossil fuel industry since 2015, when countries committed to reducing their emissions under the Paris climate accord, said the report.

The UK has put tackling climate change at the forefront of its agenda as it prepares to host a major summit, Cop26, later this year. The government last month announced a new target to reduce emissions by 78% by 2035.

Greenpeace UK's executive director, John Sauven, said: “Finance is the UK’s dirty little secret. Banks and investors are responsible for more emissions than most nations and the UK government is giving them a free pass.

“How can we say we’re ‘leading the world on climate action’ while allowing financial institutions to plough billions into fossil fuel production every year?”

The analysis was carried out by researchers South Pole. It sought to calculate carbon emissions based on the lending and investment activities of the UK’s financial sector, including 15 banks and 10 asset managers, taking into account loans and investments in industries such as energy, IT, mining and construction.