'Climate safe banking': New Guide Targets Hidden Carbon Footprint of Bank Funds

The recently launched "Greening Cash Action Guide" underscores the transformative role companies can wield in steering banks towards eco-friendly financial practices. This guide is a toolkit for C-suite leaders—especially CFOs and sustainability directors—to mitigate the carbon impact that stems from their organization's cash reserves, thereby expediting the finance sector's overall shift to greener operations.

Released today, this seminal report highlights a glaring gap: most businesses overlook the carbon emissions linked to their corporate cash holdings. Such disregard, the guide cautions, inflates companies' carbon footprints significantly.

Compiled by an eclectic group of experts—including Johan Falk from the Exponential Roadmap Initiative, Jakob König with Fair Finance Guide and the Swedish Consumers' Association, Paul Moinester from TOPO, and Allison Fajans-Turner of BankFWD—the guide furnishes a seven-point action plan. This roadmap evaluates and curbs the emissions tied to how banks handle corporate cash reserves.

The guide not-so-gently nudges firms to measure the carbon footprint of their cash assets and proactively collaborate with banks to unroll more transparent data-sharing practices.

Moreover, for companies on the path to net-zero emissions, the guide proposes they wield their clout as substantial corporate clients to urge banks to dilute the carbon density in their lending and investment activities.

Johan Falk, a luminary in the sustainability field and the CEO of the Exponential Roadmap Initiative, drives home the point that corporate culpability extends throughout their entire value chain—including financial transactions. "This manual offers hands-on tips to cut back emissions indirectly funded via companies' bank deposits," he elaborated.

Jakob König underlined that corporate clientele can be game-changers in compelling banks to adopt more genuine and potent decarbonization approaches. "The banking choices make or break the climate transition," he asserted. "Using this guide, companies can speed up their banks' eco-shift, adding value. It's a mutual win that also favours the climate."

Allison Fajans-Turner, helming the reins at BankFWD, stated that eco-conscious companies have neglected a "powerful arsenal"—their leverage over banks as critical clients. "This guide equips companies to ensure their chosen banks direct corporate cash towards fulfilling—rather than undermining—their expansive climate objectives," she noted.

Per the authors, present-day regulations don't mandate companies to disclose emissions from their cash reserves, as the pertinent Scope 3 guidelines from the Greenhouse Gas Protocol currently apply only to financial establishments and investors. However, with the inevitable tightening of climate reporting norms, companies could soon find themselves obliged to account for these often-overlooked emissions in their Scope 3 value chain reports.