BBVA is one of the top five European banks with the strongest commitment to sustainable finance, according to a report produced by World Resources Institute (WRI). The bank takes the top position in Europe and the third worldwide, when considered by asset size.
According to data provided last year and analyzed by WRI, BBVA’s dedicated commitment to sustainable finance reaches €12.5 billion per year (over the eight-year lifetime of its Pledge 2025). This figure equates to 1.83 percent of the bank’s total assets at the close of 2018, establishing the bank as the European financial institution that allocates the most to sustainable finance, based on size.
The World Resources Institute — a global research company specializing in environmental studies and global development — collected and analyzed data from the 50 largest banks in the world. The report recognized BBVA’s Pledge 2025, which commits to securing €100 billion in sustainable financing between 2018 and 2025. Only half of the banks under review have made sustainable finance commitments.
The latest data available (through June 2019) tracking BBVA’s Pledge 2025 reveals that in the first year and a half alone, the bank had already raised 21.8 percent of the total €100 billion commitment (exceeding the 18.75 percent annual anticipated average).
The study used the Green Targets tool to measure not only the degree of involvement with the environment, but also if each bank had established a green financing goal, within a specific time frame, and with funds explicitly earmarked for a range of sustainable activities.
One of the report’s main findings focused on the average time period to reach the respective commitments. This horizon ranges from five to 14 years, which equates to an average of eight and half years. In the case of BBVA, the commitment covers eight years (from January 2018 through December 2025).
Other indicators used to review the banks include average annual fossil fuel financing and the banks’ size by annual revenue and total assets.
The report concludes that most banks continue to invest more in fossil fuels than in green finance. For those banks with active commitments to sustainability, the average annual level of fossil fuel financing between 2016 and 2018 is nearly double their commitment to sustainable finance.
"Only seven banks have annualized sustainable finance targets greater than the amount of finance they provide for fossil fuel-related transactions each year," the study reveals. BBVA is one of the seven: it has committed the previously mentioned €12.5 billion to sustainable goals compared to €3.41 billion for projects involving fossil fuels.
The trend also varies by region. “On average, European and Australian banks have more ambitious sustainable finance commitments relative to their fossil fuel finance than U.S. Banks.” the report states.
Sustainable banking indicators
The WRI Green Targets web application is the first platform that investigates and compares in detail the level of banks’ sustainable financing commitments.
It uses indicators that assess various factors, from committed resources that account for their environmental commitments to the solutions they offer, for consumers and SMEs alike.
WRI also assesses whether banks disclose a transparent accounting methodology that outlines the types of businesses, projects, and transactions that are included in their sustainable financial initiatives. WRI recognizes BBVA’s commitment to financing sustainable infrastructure projects, agribusiness, financial inclusion, entrepreneurship, and the transition to low carbon.
The report also analyzes whether banks disclose the types of financial services that are included in its commitment to sustainability (direct lending, equity finance, fee-based services), differentiating between direct financing and indirect support. WRI thus recognizes BBVA’s capital commitment based on its projects, corporate lending, bookrunners, and investment funds.
The tool also evaluates if banks report on the progress of their sustainable commitments and green financing. WRI confirms that BBVA systematically reports its cumulative progress on its corporate website. BBVA also publishes its exposure to sustainable financing and uses the taxonomy defined by the Principles for Green Bonds and the Principles for Social Bonds to calculate the figures it reports.
The assessment also looks at whether the bank executive chairman or CEO publicly supports the bank's commitment to sustainability. Using this indicator, the report confirms that BBVA’s executive chairman has demonstrated public support for the bank’s commitment to sustainability, which is considered to be a central theme in many of his public statements.