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Which banks are financing the clean energy transition?

Vancity tops 2022 Sustainable Banking Revenues Ranking, though most global bankers are off to a slow start

banks financing clean energy
Photo by Arild/Flickr

Predictions for the total cost of the clean energy transition range from an incremental US$1 trillion per year to a total of US$10 trillion per year – but everyone agrees it won’t be cheap. The real question is, are the world’s banks ready to fund the development of renewable technologies at scale, and updating all the infrastructure in between? And which banks will take the lead? 

For the first time, we can see a pattern emerging. Corporate Knights has teamed up with the U.K.-based financial publication The Banker to produce the world’s first list of green-ish banks ranked by the percentage of revenues they earn through sustainable lending, underwriting and investments. The 2022 Sustainable Banking Revenues Ranking shows global bankers are off to a slow start, but over time it will help guide consistency of reporting and provide an ongoing window into bankers’ progress in meeting the world’s Paris Agreement commitments.  

Corporate Knights researchers ranked 60 banks for which they found quantifiable sustainable-revenue data from an initial pool of 91 banks. Corporate Knights ranked these banks based on their income from sustainable financing activities as a percentage of total revenues, not by total sustainable revenues, to use a more direct comparison and allow smaller institutions to compete head-to-head with global giants.  

In first place is Vancouver-based Vancity, a community-first credit union that boasts a sustainable revenue ratio of 34.13%, nearly 50% higher than that of the runner-up, Norway’s SpareBank 1 Østlandet, with 23%. 

“Being member-owned has shaped us over the decades,” Vancity president and CEO Christine Bergeron told The Banker. “We’ve always had core pillars around environmental sustainability, social equity and cooperative values, and we’ve continued to lean into those values in our activities.” 

In third spot with a ratio of 19.47% was another mission-focused institution, union-owned Amalgamated Bank, which calls itself “America’s socially responsible bank.”  

These rankings will likely change quickly as the energy transition ramps up and big institutions compete to participate in new electrical grids, factory retoolings and infrastructure upgrades.  

Fourth-place Intesa Sanpaolo Group is Italy’s leading banking group, with 3,700 branches and 13.5 million clients. Elena Flor, Intesa’s head of ESG and sustainability, tells The Banker her bank has already integrated social context into its operations: “We act not only on the basis of profit, but with the objective of comprehensive long-term value creation for all our stakeholders, including our commitment to the reduction of climate-change impact and social inequalities.”  

To qualify for the ranking, banks must have signed up to the UN’s Net-Zero Banking Alliance (NZBA), which means they commit to achieving net-zero lending and investment portfolios by 2050. Firms on the list must also have committed to reporting climate-related activities through the Task Force on Climate-Related Financial Disclosures framework, designed to boost transparency and ensure that opportunities and risks related to climate will become a natural part of firms’ planning and risk-management processes 

However, there is always room for improvement, even among these leaders, and especially when it comes to disclosing specifics in their sustainable financing commitments. Corporate Knights researchers found it was hard to distinguish banks’ revenues from sustainable investments because of the lack of detail and the lofty big-picture nature of the commitments they’ve made. “In an ideal world,” explains Matthew Malinsky, research manager at Corporate Knights, “we’d look at banks’ annual audited financial statements and see the specific outstanding exposures to sustainable activities on the loan book and the investment book, as well as any new additions throughout the reporting period. 

Adds Malinsky, We’d also see the underwriting activity to sustainable companies or sustainable activities, and we’d know interest, fees and other income earned from these activities. Finally, wed be clear on which definitions were being used and which taxonomy the definitions were derived from.”  

Corporate Knights researchers also found that banks are achieving only a fraction of the financing needed for the energy transition.  

Based on an analysis by management consulting firm McKinsey that found the world needs US$9 to $10 trillion in annual financing to meet Paris Agreement targets, Corporate Knights estimates that approximately 5% of total global banking assets will need to be allocated to sustainable finance on a revolving basis. The total outstanding sustainable loan book of the 60 banks in the ranking is US$687 billion, approximately 1% of their total loan (based on their disclosures that can be quantitatively vetted).   

“The climate-action revolution must be funded or it won’t happen,” says Toby Heaps, co-founder and CEO of Corporate Knights. Heaps hopes the list will help bankers, governments and climate-watchers track the progress of the clean energy revolution. “We now have a critical mass of banks – 40% of global balance sheets – represented in the NZBA, committed to playing their role in financing and making climate transition a reality.” 

Ranked by total sustainable revenues, Intesa Sanpaolo places first on the list, with US$3.68 billion, followed by New York City–based Citi at US$2.18 billion and France’s BNP Paribas with US$1.51 billion. All three firms claim they have adopted sustainability and supporting the net-zero transition as key objectives.  

Karoline Bakka Hjertø, head of sustainability at SpareBank 1, believes green banking is just beginning to take off. “I think it is impossible to work within sustainability – in any industry – and be happy about the speed of activity,” she told The Banker. “We all agree that change needs to happen faster, and that really this work should have started decades ago.” 

RankBankCountrySustainable Revenue RatioTotal Sustainable Revenue (USD mns)Oustanding Sustainable Loan Book (USD mns)Total Sustainable Underwriting Volume (USD mns)
1VancityCanada34.12%171.300
2SpareBank 1 ØstlandetNorway23.03%104.56388.90
3Amalgamated BankUSA19.46%39.51048.40
4Intesa SanpaoloItaly6.72%3677.5220117.77130.8
5Commerzbank AGGermany6.53%1001130523.390552.3
6JB Financial GroupSouth Korea5.21%132.93241.90
7Investec groupSouth Africa5.03%157.12386.15.3
8DBS Bank Ltd.Singapore3.77%694.72362328763.8
9BMO Financial GroupCanada3.58%877.722781.426069.1
10CitiUSA3.02%2177.7279004200
11AIB Group PlcIreland2.73%102.329070
12Svenska HandelsbankenSweden2.32%122.87305.6391.2
13Standard Chartered plcUnited Kingdom2.25%351.910463.91523
14Australia & New Zealand Banking Group Limited (ANZ)Australia1.86%2388155.1667.7
15Banco Mercantil del Norte, S.A. Institución de Banca Multiple Grupo Financiero Banorte.Mexico1.83%144.21018.32853.6
16NatWest GroupUnited Kingdom1.72%376.610288.912357.8
17BNP ParibasFrance1.64%1511.638953.531976.7
18Swedbank ABSweden1.48%95.65479.832.9
19Société GénéraleFrance1.39%826.61831413312.4
20Danske Bank A/SDenmark1.26%237.716209.711565.5
21CaixabankSpain1.26%318.518106.18046.5
22Royal Bank of CanadaCanada1.17%470.514067.512540.2
23HSBC Holdings plcUnited Kingdom1.16%824.32220020481.8
24Skandinaviska Enskilda BankenSweden1.11%80.34291.3717.6
25Crédit Agricole S.A.France0.98%11511918666860.5
26INGNetherlands0.96%280.37848.814263.5
27BankinterSpain0.95%29.81580.2145.3
28Commonwealth Bank of AustraliaAustralia0.94%145.442564627
29National Bank of CanadaCanada0.93%67.42170.40
30First Abu Dhabi Bank P.J.S.C.United Arab Emirates0.78%861949.90
31Banco Sabadell S.A.Spain0.64%56.12030.22634.4
32Coöperatieve Rabobank U.A.Netherlands0.58%123.33633.72958.7
33Deutsche Bank AGGermany0.4%199.9944.845058.1
34Barclays Group plcUnited Kingdom0.33%119.2032211.4
35Virgin Money UK PLCUnited Kingdom0.28%6.5244.90
36TD Bank GroupCanada0.28%992264.325401.9
37UniCreditItaly0.27%119.63574.17213.7
38CIMB Bank BerhadMalaysia0.23%34.1771.2565.6
39Nordea Bank AbpFinland0.22%3409179.9
40Erste Group Bank AGAustria0.21%26.507155.5
41National Australia Bank LimitedAustralia0.19%2205949.2
42JPMorgan ChaseUSA0.18%222060000
43UBS AGSwitzerland0.13%48.8013200
44BBVA GroupSpain0.09%35.909713.7
45Credit SuisseSwitzerland0.07%1504062
46The Goldman Sachs Group, Inc.USA0.06%42.7011550.1
47Groupe BPCEFrance0.06%28981.10
48Shinhan Financial GroupSouth Korea0.04%12.4344.40
49Morgan StanleyUSA0.03%24.306574.3
50Canadian Imperial Bank of CommerceCanada0.03%109.93997.5690.4
51Lloyds Banking GroupUnited Kingdom0.03%21.5498.51840.4
52Garanti BankTurkey0.02%8.386.70
53Bank of AmericaUSA0.02%19.74000
54KB Financial Group Inc.South Korea0.02%8.300
55Bank of New Zealand (BNZ)New Zealand0.01%0.3071.6
56Wells Fargo & CompanyUSA0.01%8.402270.6
57Türkiye İş Bankası A.Ş.Turkey0%0.911.10
58ScotiabankCanada0%0.70201
59Nomura Holdings, Inc.Japan0%000.7
60Mizuho Financial Group, Inc.Japan0%000.5

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