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Environment 02 Dec 2019

Banking’s commitment to the fight against climate change, much more than a slogan

BBVA participated at a conference in Luxembourg organized by United Nations Environment Programme Finance Initiative (UNEP FI). During the forum, which coincided with the start of the Climate Summit in Madrid, BBVA laid out its strategy to help its customers transition toward a low-carbon economy and integrate climate risks into their decision-making.

BBVA Executive Member of the board, José Manuel González-Páramo, described BBVA efforts on the first day of the conference, which was held within the framework of the UNEP FI series of regional roundtables.  BBVA Global Head of Responsible Business Antoni Ballabriga and Derya Ozet Yalgi, Head of Sustainability for BBVA Garanti, also participated in the event.

Executive Vice President of the European Commission and EC Vice-President for the Euro and Social Dialogue Valdis Dombrovskis joined the event and shared progress made with respect to the EU Action Plan and the new Commission’s proposed “New Green Deal for Europe,” which they hope will be approved in the Commission’s first 100 days. This ambitious “great accord” aims to raise the emissions reduction commitment for 2030 from 40 percent to 50 or 55 percent and to be carbon neutral by 2050.

According to José Manuel González-Páramo, the industry’s commitment to the fight against climate change should be much more than a catchy slogan. It must be a strategic priority, reflected in activities aimed at financing the transition in order to curb climate change and achieve the United Nations’ Sustainable Development Goals (SDGs). Internal management of the risks associated with climate change and the engagement of the entire financial sector in order to accomplish the SDGs are also paramount to the cause.

BBVA Executive Member of the board José Manuel González-Páramo, during the conference

González-Páramo believes the financial sector plays a decisive role in the fight against climate change owing to its capital generation capacity. Furthermore, banks will be trusted advisors to their customers during the transition to a more sustainable economy and will help them incorporate social and environmental criteria into their decision-making processes. Ultimately, “the future of banking lies in financing the future.”

This is the direction BBVA is going. José Manuel González-Páramo reminded the group that BBVA’s commitment to sustainable development is reflected in Pledge 2025, the bank’s strategy — released in 2018 — to align the business with the Paris Agreement on climate change.

Banks must collaborate to curb climate change

According to the BBVA Executive Member of the board, banks must manage not only the financial risks that climate change poses to their balance sheets, but also the direct and indirect impact of their business activities. Hence, commitment from financial institutions is absolutely critical. BBVA has stepped up to the plate with its Pledge 2025.

González-Páramo explained that the bank focuses its effort on the areas of greatest impact: it joins its customers in tackling the transition and works with other institutions to develop methodologies to measure the climatic impact and align itself with local and global goals.

Furthermore, BBVA engages with governments and other relevant organizations to develop transition roadmaps for specific sectors. José Manuel González-Páramo also stressed the importance of using alternative technologies to confront the challenge of climate change in sectors such as mining. For those clients in sectors where there are no existing technology alternatives, BBVA reinforces its commitment by helping them innovate.

BBVA Global Head of Responsible Business Antoni Ballabriga

The Katowice Commitment

Collaboration is imperative. Climate change is a huge, global challenge that affects everyone everywhere. Therefore, it requires a systemic change. We all need the appropriate knowledge and effective methodologies if we are to manage it correctly. In González-Páramo’s opinion, this is why collective commitments are so important. The Katowice Commitment, an initiative led by BBVA along with ING, SocGen, BNP Paribas, and Standard Chartered, exemplifies the kind of collaboration required.

Antoni Ballabriga, BBVA’s Global Head of Responsible Business and Co-Chair of the UNEP FI Global Steering Committee, described the importance of Katowice as providing the impetus for the recently signed Collective Commitment to Climate Action, considered by the United Nations to be “the farthest-reaching commitment to climate by the banking sector to date”.

Ballabriga underscored the fact that as part of this commitment, 30 large international banks have signed up to common goals to “facilitate the economic transition necessary to become climate neutral.” They also commit to working together and providing mutual support “in order to develop the capabilities of each bank and the necessary methodologies to be able to measure the business’ impact on the climate and adherence to local and global climatic goals.

Finally, he stressed the most recent steps taken by the sector on the path toward sustainable financing and how important it is for the industry to be aligned. Along these lines, he also singled out the Collective Compromise for the Climate Action announced in New York and a similar pledge made by investors with the Asset Owner Net-Zero Alliance, which has been signed by Allianz.

Derya Ozet Yalgi, Head of Sustainability at Garanti BBVA, assessed the impact of climate change from the point of view of the bank’s corporate clients. In his view, the tools needed to confront the challenges that lie ahead must be created and incorporated into the bank’s general decision-making processes.

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