Dive Brief:
- Morgan Stanley will start measuring and disclosing greenhouse gas emissions that stem from the organizations in which it invests and to which it lends, the bank said Monday, announcing that it is joining the steering committee of the Partnership for Carbon Accounting Financials (PCAF).
- The PCAF, which was launched in 2015 by 14 Dutch financial institutions and expanded globally last year, aims to standardize carbon accounting to help banks measure and reduce their climate impact. Its 66 members represent $5.3 trillion in assets, the organization said. Morgan Stanley is the first U.S.-based global bank to join.
- The move comes less than two weeks after four other U.S.-based systemically important financial institutions — JPMorgan Chase, Bank of America, Goldman Sachs and Wells Fargo — were revealed as backers of the Rocky Mountain Institute's Center for Climate-Aligned Finance.
Dive Insight:
Banks increasingly view the value — not just in optics but in revenue — of environmentally responsible investment.
"We are excited to join PCAF and to support the important work they are leading to build a methodology for global banks’ efforts to track and measure climate change risks," Audrey Choi, Morgan Stanley’s chief sustainability officer, said in a statement Monday.
About 130 banks committed last year to align their business with the U.N.'s Paris Agreement on Climate Change — a goal PCAF shares.
The addition of an American bank can be seen as a win for PCAF. The banking sector's four biggest lenders to fossil fuel companies from 2016 to 2019 were U.S.-based, according to data from the Rainforest Action Network.
Ben Cushing, a senior campaign representative for the Sierra Club, called the move a "major step in the right direction for Morgan Stanley."
"Wall Street is driving the climate crisis, and if banks want to be part of the solution, they have to start by being transparent about the extent to which they’re currently part of the problem," Cushing told Bloomberg.
U.S.-based banks have taken several steps over the past few months to boost their green profile. Goldman Sachs in December laid out a 10-year goal to commit $750 billion in loans, underwriting, advisory services and investments toward companies and projects focused on renewable energy, sustainable transportation and affordable education.
Citi, the first major U.S. bank to sign on to last year’s U.N. initiative, pledged in April to stop providing financial services to thermal coal-mining companies by 2030.
Wells Fargo has increased its investment in solar energy.
And banks have found there are consequences for not doing so. Climate change-related policy shifts such as a carbon tax could cost the financial industry up to $1 trillion, a February study by management consulting firm Oliver Wyman found.
The global responsible loans market increased 40% between July 2018 and July 2019, an S&P Global Ratings report found.
