Spanish banks agree to reduce their carbon footprint in line with the Paris Agreement

The signatory entities of this collective commitment will develop the necessary methodologies to measure the climatic impact of their clients’ activities.

On the occasion of the United Nations Climate Change Conference (COP25), which is being held in Madrid, the main Spanish banks, representing more than 95% of the sector, today presented a joint commitment to reduce the carbon footprint in their credit portfolios within a specified timeframe, in a manner that can be measured with internationally accredited criteria and in line with the objectives of the Paris Agreement. In this way, these entities align themselves with the “Collective Commitment to Climate Action” promoted by UNEP FI.

The agreement, which brings together more than twenty leading banking entities, was presented at an event held today at the Spain Pavilion in IFEMA, the venue for COP25, by the president of the Asociación Española de Banca (AEB), José María Roldán, the general director of the Confederación Española de Cajas de Ahorro, José María Méndez, and the president of the Instituto de Crédito Oficial (ICO), José Carlos García de Quevedo.

Also present at the event were delegates from the banking entities signatory to the agreement: Banco Santander, BBVA, CaixaBank, Bankia, Banco Sabadell, Bankinter, Kutxabank, Unicaja Banco, Abanca, Ibercaja Banco, Liberbank, ING Bank, BNP Paribas, Banca March, BCC-Grupo Cajamar, Cecabank, Société Générale, Bankoa – Grupo Credit Agricole, Banco Mediolanum, Triodos Bank, Caja de Ahorros y Monte de Piedad de Ontinyent, and Colonya Caixa D’Estalvis de Pollença.

Under this agreement, the signatory banks commit to developing the necessary methodologies to assess the impact that their clients’ activities may have on their balance sheets from an environmental preservation and climate change mitigation perspective, thus ensuring that their balance sheets are aligned with the Paris Agreement and the Spanish climate agreement. The main objective of both agreements is to maintain the global average temperature below 2 degrees Celsius above pre-industrial levels and to continue efforts to limit the increase to 1.5 degrees Celsius.

The entities also aim to work together and support each other in developing the necessary methodologies to measure climatic impact. The signatories of the agreement are free to choose their own methodologies, although they are willing to share experiences with one another in order to enable the comparison of results and improve measurements. Additionally, they will do everything possible to adapt to best practices and international standards in this area.

The agreement states that within a maximum period of three years, the entities will have established and published specific sector objectives based on scenarios for aligning portfolios with the objectives of the Paris Agreement. Following the signing of the agreement, the first fruits of this commitment could begin to be seen within a year, as the banks aim to publish and implement a set of measures during that period, which they will take in ongoing dialogue with their clients to promote the transition towards low-carbon technologies, business models, and climate-resilient societies. Each entity, in addition, will report annually on its individual progress and biannually on the collective progress achieved in developing this commitment.

Initially, the signatory banks will focus their efforts on the sectors within their portfolios that are most carbon-intensive and most vulnerable to climate change, which are key to transitioning to a low-carbon economy and building resilience in communities most exposed to the effects of climate change. They also aim to engage their clients in this transition process.

In the words of José María Roldán, president of the AEB, this agreement demonstrates that “banks are aware that they have in their hands the means to face challenges and also to seize the opportunities offered by the fight against climate change; for this reason, they want to contribute to making the necessary changes to achieve a low-carbon and climate-resilient economy.”

For his part, the president of the Instituto de Crédito Oficial, José Carlos García de Quevedo, pointed out that ICO’s adherence to this agreement “reinforces the public bank’s commitment to contribute, through the public-private collaboration model, to the banking system’s initiative to promote a more sustainable growth model. Therefore, it adopts the Paris objectives as its own and participates in all sectoral debates regarding the best way to address the banking challenges linked to climate change.”

The General Director of CECA, José María Méndez, stated, “the decarbonization of the economy is a huge challenge. The only way to find the right path is through building consensus among regulators, supervisory authorities, and the private sector. Through the signing of these commitments, we are demonstrating that banking entities are aware of their responsibilities towards climate change.”