Covid may have paused the world’s economy, but it has not stopped climate change. The world is still heading for a temperature rise in excess of 3°C this century, far beyond the 1.5°C warming limit set by the Paris Agreement. If we don’t stop that from happening, the consequences for the world will be profound. This is, therefore, an emergency. The good news is that it’s not too late to avoid it, but must act now and quickly. The progress we make in the next decade will be absolutely key.
To hit that 1.5°C mark the world will need not only to reduce greenhouse gas emissions by 45% from 2010 levels by 2030 (UN IPCC estimations), but to reach what is called ‘net zero’, a balance where carbon emissions produced equal those removed from the atmosphere, by 2050.
The financial sector has a fundamental role to play for a very obvious reason: we finance the economy. As one of the world’s largest banks, we have a responsibility to help people and businesses cut emissions, and support the transition to the green economy.
Scaling up our ambition: aligning our portfolio to Paris Agreements
That is why we are setting our ambition to achieve ‘net zero’ carbon emissions in our portfolio across the Group by 2050. The ambition applies to the group’s own operations, which are already net-zero, and all client emissions that result from any lending, advisory or investment services provided by Santander.
This is a bold ambition, and the journey ahead will be long. But we must make a start. And the first steps are clear.
We have published our first decarbonization targets in ‘carbon emitting’ sectors of our lending portfolio, starting with power – the most concerning sector exposed to climate change we have.
That means that by 2030, we will stop providing financial services to power generation clients with more than 10% of revenues dependent on thermal coal; and we will eliminate exposure to all thermal coal mining production worldwide.
As I said, this is just the start. We will provide further details of the rest of the roadmap later this year. By September 2022, we will share decarbonization targets for other material sectors, including Oil & Gas, Automobile Manufacturing, and Mining & Metals.
Meanwhile, we will continue to report on and disclose our climate-related and environmental risks, by implementing the recommendations of the Task force for Climate-related Financial Disclosures (TCFD). This will ensure we embed tackling climate change, and supporting the green transition, into the heart of our strategy and how we run the bank.
While we do this, to create a sustainable and resilient long-term future, we’ll do two other things.
First, we must help mobilize the trillions needed to finance the green economy. Of course we want economies to grow. But we need to break the link between growth and harmful carbon emissions. This is why renewable energy is so important. Santander is a world leader in financing renewable energy projects. Last year alone we financed projects which produced enough power for more than 10 million households.
Again, this is just the start. We have committed to mobilize €120 billion euros in green finance by 2025, and €220 billion by 2030. On top of that, we are looking for ways to mobilize the power of our 148 million customers worldwide: we need to encourage them to go green in all the financial decisions they make – such as buying cars and insulating their homes. So we are looking at ways we can do that, too.
Finally, and obviously, we need to minimize the impact our own operations have on the environment, and cut Santander’s own emissions.
We’ve made good progress here - we’ve been measuring our environmental footprint since 2001. In 2020 we achieved carbon neutrality in our own operations by using renewable energy and offsetting any outstanding balances. 57% of the energy used in our buildings is renewable, with Germany, Spain, Portugal and the UK already using 100% green energy. And we pledge to source our entire electricity supply from renewable energies by 2025 and keep working to cut our emissions further.
The bottom line is clear. To tackle climate change urgent action is needed, now. Yes, this is about managing the risks that climate change creates. But it’s also about grasping the opportunities created by the green revolution – a revolution that requires massive investment in new technology and systems.
The change that is required cannot be delivered by any individual, business or government alone. Like with covid, tackling climate change relies on international cooperation, and all of us must work together to take meaningful and urgent action. An ambition to be net zero is one step – but as the Chinese proverb says, “the journey of a thousand miles begins with a single step”.