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BANKING SECTOR FAILING TO RESPOND TO CLIMATE EMERGENCY

Green banking initiatives have not changed lending and investment practices

  • The past five years have seen the creation of financial industry initiatives on sustainability, including the Taskforce on Climate-related Financial Disclosures (TCFD), Principles for Responsible Banking (PRB), the Platform for Carbon Accounting Financials (PCAF) and many others
  • Yet financing for fossil fuels continues to rise each year, totalling $1.9 trillion from 2016-2018
  • Only 60% of banks have developed exclusion or restriction policies for high-carbon sectors and just 16% of banks exclude clients involved in deforestation
  • Just 50% of banks engage high-carbon clients on transition strategies and only 12% ask high-carbon sector to adopt TCFD guidelines

new report from Boston Common Asset Management (BCAM) finds that, despite an explosion of risk assessment tools and green banking industry initiatives in recent years, practical change in the financial sector remains elusive.

Boston Common Asset Management, in partnership with a number of regional partners, engaged 58 of the world’s largest banks, including the likes of HSBC, JP Morgan Chase, BNP Paribas and MUFG. The research identifies some progress in terms of governance, with a majority of banks endorsing the TCFD guidelines (69%), disclosing TCFD governance reforms (71%) and carrying out climate risk assessments (78%).

However, the new research shows these tools are not impacting on decision-making, with 40% of banks failing to develop any new financing or investing exclusions/restrictions as a result of their climate risk assessments.

The result is superficial progress, where over 80% of banks have announced low carbon products and services, but financing for fossil fuels continues to increase each year. The report notes that the green bond industry has grown from just $1 billion a decade ago to over $200 billion in 2019 alone, but this is dwarfed by investment in fossil fuels, totalling $1.9 trillion from 2016–2018.

Lauren Compere of Boston Common Asset Management said that,
“The scale of the climate crisis demands a more radical transformation of the banking sector. Our findings indicate a systematic reluctance by banks to demand higher standards from high carbon sector clients, despite the fact that doing so could vastly reduce bank risk and accelerate action on climate change.”

The report calls for “a cultural shift within banks from the board all the way down to the front-line manager bringing in new business. This must include a willingness to walk away from clients or to no longer issue new financing once existing obligations are paid off.”

Specifically, the report calls on banks to:

  • Adopt a clear strategy for decarbonizing balance sheets, including clear timelines for restrictions and phase-outs of financing for fossil fuels and deforestation
  • Set explicit targets to increase the proportion of sustainable finance commitments relative to their overall financing activities, noting that 45% of banks have yet to set any such objectives
  • Publicise their definitions of ‘low-carbon’ and ‘green’ investment, noting that some green finance commitments appear to be merely re-allocations or rebranding of existing commitments.
  • Integrate public policy on climate into overarching climate strategy, engage trade associations on adopting progressive climate policies, and use the company’s public voice to promote progressive climate policy with governments and regulators.

Vincent Kaufmann, CEO of Ethos, endorsed the findings, saying,
“Financial institutions are increasingly aware of their influence in the energy transition and of the risks climate change poses to their activities. However, policies and transparency should be reinforced to make sure that general corporate loans are not used for sensitive projects that further fuel climate change.”

Laura Gossett, Senior Analyst at SHARE, noted that,
“We were encouraged to see that TD Bank, RBC and CIBC have made sustainable finance commitments in 2019, but it is extremely disappointing that no major Canadian bank has developed exclusion policies for high carbon sectors or requirements for clients to commit to no-deforestation policies.”

Stuart Palmer, Head of Ethics Research at Australian Ethical, said,
“Science based restrictions on thermal coal lending need to extend to oil and gas, as Australia faces the prospect of new unconventional gas projects which are inconsistent with 1.5 degrees. The responsible voice of banks and the industry associations they support is also crucial to promote constructive public discussion of climate issues and action.” 

 

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BATTLEFACE RECEIVES INVESTMENT FROM FINTECH VENTURES FUND

battleface Inc., a rapidly growing tech-enabled insurance startup focused on providing travel insurance products for unconventional travellers worldwide, announced today that it successfully closed its seed financing round with backing from leading strategic and venture capital investors.

 

Atlanta, Georgia-based Fintech Ventures Fund has invested in the company, joining existing investors Greenlight Re and Tangiers Group. This investment will be used to expand software development, hire sales and business development personnel, and further the company’s global reach.

 

Sasha Gainullin

battleface is led by a team of travel insurance experts. CEO Sasha Gainullin previously developed global operations for AIG Travel Guard and has worked with battleface since its inception. Managing Director Paul Simmonds brings experience as a Lloyd’s of London underwriter with previous leadership roles at Berkley Syndicate, CNA Hardy, Brit, and Goshawk.

 

“We got our start because many travellers couldn’t find the right insurance products with coverage for their unique travel destinations and real needs,” said Gainullin. “With the latest investment from Fintech Ventures Fund, we’ll continue to expand our B2B partnerships custom-building travel insurance solutions for groups, including business and NGO travellers, associations and membership-based organisations.”

 

battleface combines innovative technology and underwriting to create, distribute and service specialty travel insurance products for people in both retail and wholesale. Products are supported by a network of 24/7 assistance coordinators, medical providers and on-the-ground field agents who provide emergency claims, medical and travel assistance services on a global basis.

 

Fintech Ventures Partner Lucas Timberlake said: “A core area of our fund’s investment thesis is that technology can be leveraged to more efficiently provide insurance products to markets that have been underserved by current offerings. We believe that battleface’s seasoned management team will create an industry leader in the travel insurance space. It is for these reasons that we are excited support the company’s future growth.”

 

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VANQUIS BANK PARTNERS WITH HOOYUTO DIGITALISE KYC PROCESSES

HooYu KYC digital journey deployed during the customer lifecycle on a risk-based approach

 

Leading customer onboarding and KYC technology firm, HooYu, has announced a partnership to digitalise Vanquis Bank’s KYC processes.  The HooYu KYC journey has been selected to provide additional identity proofing during the customer lifecycle when customers perform a potentially high-risk action on their accounts.

 

Vanquis Bank is part of the Provident Financial Group, a UK and Ireland business with over 140 years’ experience in lending to consumers who are not well served by mainstream lenders. With millions of customers, Vanquis needed to find a way to help balance fraud prevention and KYC with a great customer experience.

 

Existing customers calling in to the change the details on their account were in some cases having to wait weeks before the change could be approved.   The team at Vanquis Bank is continually looking to improve how their products work for their customers and that they are easy to apply for and manage.  Vanquis Bank decided to implement an ID document validation solution that would speed up customer lifecycle management and improve the customer experience.

 

Sue Singleton, Process Change Assurance Manager at Vanquis Bank said, “By adding HooYu to our KYC tools, we can improve some of our higher risk customer processes and can now facilitate customer requests without asking the customer to post in copies of documentation. Our agents deal with thousands of customers a day and now what could have been a delay of weeks for our customers, can be achieved in a matter of minutes with HooYu”.

 

David Pope, Marketing Director at HooYu said, “It’s been great to see the results of Vanquis implementing the HooYu digital journey and how the HooYu UI and UX tools are helping their customers though the KYC process.”  

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