As companies increasingly focus on combating climate change, a new report reveals that for many of the world’s largest companies, the carbon footprint generated by their investments and cash held in big banks are a significant source, and sometimes their largest source, of emissions.
‘The Carbon Bankroll: The Climate Impact and Untapped Power of Corporate Cash’ provides an analysis of the hidden climate impact of corporate finances, making it possible to understand the scale of emissions generated by a company’s cash, investments, and financial practices.
Using ten major corporations’ publicly available data, the report illuminates how the financial system – particularly the banking sector, which uses client cash to finance fossil fuels – undermines the sustainability efforts of climate-conscious companies. The report finds that for several companies, including Google, Meta, and PayPal, the emissions generated by their cash and investments exceed all their other emissions combined.
‘The Carbon Bankroll‘, jointly published by the Climate Safe Lending Network (CSLN), The Outdoor Policy Outfit (TOPO), and BankFWD, allows companies to estimate how much their financial practices work against their ambitious goals to rein in emissions from direct and indirect operations across their value chains. The analysis also suggests how companies can leverage their financial practices to accelerate the decarbonisation of the financial sector, which is critical to achieving the global climate goal of limiting warming to 1.5°C.
“Tackling climate change effectively at this critical time depends on ensuring the financial system aligns with maintaining a liveable planet for generations to come,” said James Vaccaro, executive director of CSLN. “By helping businesses recognise how the financial system converts the money they manage day-to-day into the activities that shape our economies for the decades to come, with the associated positive and negative impacts, we hope to stimulate a new dialogue between corporations and the finance sector that could super-charge the net-zero transition.”
The recent growth of environmentally and socially responsible investments reflects companies’ increasing recognition that how they bank and invest their money has an impact on people and the planet. The report’s research and replicable methodology, which was produced in partnership with finance data experts at leading climate solutions provider South Pole, fills critical data gaps that underscore the magnitude of the emissions generated by corporate cash and investments. By discovering the enormous scale of this emissions source, the report emphasises the need for companies to prioritise the decarbonisation of their cash and investments.
Among the key findings, the report shows that, for some of the world’s largest companies, including Google, Meta, Microsoft, and Salesforce, their cash holdings are their largest source of emissions, increasing total emissions by 91 per cent to 112 per cent when compared to most recently reported emissions.
Additionally, for companies with more carbon-intensive operations such as Amazon and Johnson & Johnson, their cash holdings still constitute one of their largest emissions sources, increasing total emissions by 11 to 15 per cent compared to most recently reported emissions.
“The companies highlighted in this report are all environmental leaders that have been working for years to combat climate change and decarbonize their supply chains,” said Paul Moinester, executive director of TOPO. “This report reveals that these companies’ substantial climate accomplishments are being severely undermined by a misaligned financial system that is channeling hundreds of billions of corporate US dollars into the carbon-intensive sectors driving the climate crisis.”
“Financial institutions have a pivotal role to play in achieving our global net-zero targets, and leading businesses can facilitate this through a better understanding of the emissions associated with their cash and investments. We hope that our research helps illustrate the urgent need for greater disclosure from banks regarding their financed and facilitated emissions, and that it inspires deeper collaboration across industries to develop and adopt harmonised reporting and accounting standards for climate action,” said Andres Casallas Ramirez, director of Sustainable Finance at South Pole.
