The European Banking Authority, which writes the rule book enforced by the European Central Bank and national supervisors, is correct in its assessment that there has been an increase in the number of greenwashing cases across banks, asset managers and insurers (“Rising tide of greenwashing across finance flagged by EU supervisors”, Report, June 2).
But that hides a more nuanced picture. The core business of a bank is to lend money and while doing so, they should support economic growth and prosperity for society at large. Green financing will only be truly green when economies reach net zero.
But the fact is we are not there yet, and as such this transition requires financing to businesses and economies that are not green. Financing brown companies today is not inherently bad, as long as those companies are doing their utmost to reduce their emissions over time and transform their businesses towards net zero.
The broadly undefined and wide umbrella used for greenwashing penalises banks unfairly. Banks are trying hard and they are going green. They’re also committed to accompanying clients and customers on their own journeys to net zero.
They have developed a broad suite of sustainable financing solutions — for instance, banks cut their direct emissions and also those of their clients.
Many are providing clients (at no cost) with analytics, insights and end-to- end solutions for assisting them with their transition plans. They have invested heavily in environmental, social and governance training, skillsets and data infrastructure. And of course, we mustn’t forget that they are heavily investing in climate tech innovation and circular economy solutions.
The progress is there for all to see, and we must ensure that these accusations of greenwashing do not backfire on us at such a pivotal moment in the green transition. More regulation will not fix the issue but rather create unnecessary tension on the journey to net zero global economies.
If we are to point the finger on the subject of greenwashing, let it not be pointed at the banks.
Fernando de la Mora
Managing Director (Spain and Portugal)
Alvarez & Marsal, Madrid, Spain
