The G-SIB are 30 global banks whose failure poses disproportionate risks to the global economy and whose assets represent nearly 63% of global banking assets as of year-end 2021.  The list is shown on Table A1 of the attached Board of Governors of the US Federal Reserve report that discusses what these banks are doing about climate change.

In short

  • Most have committed to fully offsetting their emissions by mid-century – Therefore, they have made the commitment
  • They are only beginning to measure financed emissions due to their loans and investments, which are the vast majority of their emissions – So, their downstream requirements will increase
  • They have committed to increase green financing and are doing so – Sustainable / carbon neutral / net zero companies will benefit from this
  • They are short of time – Programs will be accelerated

Why are the G-SIB members engaged in climate issues?

  • The climate landscape is rapidly evolving via new regulations, enhanced societal preferences and technology advances
  • This shifting landscape will create winners and losers
  • The G-SIB members are therefore assessing risk and opportunity associated with climate change

Likewise, climate regulations are increasing all over the world

  • The Task Force on Climate-Related Disclosures now has 859 financial firms, including all G-SIBs, totaling $175t
  • Governments are imposing stricter emissions standards
  • The UK now requires its large companies to report their climate risks and opportunities
  • The EU has its new emissions laws
  • Japan has its new emissions laws
  • The US SEC is preparing to publish its new laws
  • Major governments are assessing climate risk via stress tests
  • It is predicted that by the end of this year, the majority of the world’s economies will have climate/sustainability components in their monetary policies

What does all this mean for you?

  • This is moving very fast
  • As the governments and G-SIB members squeeze down, the influence of climate and sustainability increases on the cost of money
  • This cost of money influence can be managed by vendor selection (as you are part of their Scope 3 emissions)
  • This will accelerate vendors being replaced by sustainable companies
  • This brings us back to the G-SIB review of the shifting landscape that will determine winners and losers
  • Given that they have already committed to net zero, and the effort to achieve same, and assessed the risks of not pursuing same, their tolerance for downstream users of their funds that are not equally committed will likely be small