Standard Chartered announces targets to reach net zero carbon emissions by 2050

Standard Chartered Group announced new targets to reach net-zero carbon emissions from its financed activity by 2050.

In a statement issued on Thursday, 28 October, the group revealed ambitious plans as well as interim targets for 2030 for the most carbon-intensive sectors.

While 33 of its 59 footprint markets do not at present have a commitment to reach net-zero by 2050, Standard Chartered is setting out a plan for this timeline, recognising their role in the transition. Many of these markets are currently reliant on carbon-intensive industries for continued economic growth.

"Achieving a just transition – one where climate objectives are met without depriving developing countries of their opportunity to grow and prosper – will require capital and specialised support," the company said in a statement. They asserted that they are uniquely placed to help by directing capital to markets that have both the opportunity to adopt low-carbon technology, and some of the toughest transition-financing and climate challenges.

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The net-zero approach

According to data from the company, the current estimate of in-scope baseline emissions from its corporate client base as of the end of 2020 is 45.2 million metric tonnes of carbon dioxide equivalents, associated with $74.8 billion of assets (or 77 percent of total drawn on-balance-sheet financing exposure of $97.3 billion to corporate clients).

They aim to reduce the emissions associated with financing activities to net-zero by 2050, setting 2030 interim targets in the most carbon-intensive sector.

The company has pledged to stop financing companies that are expanding in thermal coal. Ongoing provision of financial services to the client group will be subject to enhanced due diligence. They aim to reduce absolute financed thermal coal-mining emissions by 85 percent by 2030, in addition to the existing prohibition on financing new or expanding coal-fired power plants. By 2030, it will only provide financial services to clients who are less than 5 percent dependent on revenue from thermal coal.

Expanding plans for green and transition finance, they are targeting 2030 reductions in revenue- based carbon-intensity (i.e. the quantity of greenhouse gas emitted by our clients per USD of their revenue) of:

⦁ 63 percent for power

⦁ 33 percent respectively for steel and mining (excluding thermal coal mining)

⦁ 30 percent for oil and gas

By the end of 2022, Standard Chartered expects all clients in the power generation, mining and metals, and oil and gas sectors to have a strategy to transition their business in line with the goals of the Paris Agreement.

Having already covered nearly two-thirds of in-scope financed emissions, targets for remaining carbon-intensive sectors will be announced in line with current guidelines from the Net Zero Banking Alliance, before the first quarter of 2024.

The company will also be sharing the methodology in a white paper to help collective learning and encourage discussion and debate

A transition acceleration team will provide clients in carbon-intensive sectors with expertise on how to accelerate low-carbon transitions, and tools to measure their progress. Also included in the plans is the launch of a Universal Climate Finance Loan to incentivise clients to outpace national decarbonisation rates, as well as sustainable retail products such as green mortgages in key markets. In wealth management, by 2025 they aim to double sustainable investing assets under management and integrate environmental, social and governance considerations into advisory activities.

José Viñals, Group Chairman, commented: “Following engagement with clients, shareholders and NGOs, we are today setting out our methodology for how we intend to reach net-zero by 2050.

"We are motivated by a belief that we can and must address the need for decarbonisation as a result of greater climate-related risks, which increase financing costs and hamper emerging markets’ long-term economic prospects,” he remarked.

Bill Winters, Group Chief Executive, added: “We’re confident that we’re on a science-based trajectory toward net-zero financed emissions by 2050 that is consistent with the Paris Agreement.

With a reduction in emissions associated with financing activities, the company also looks to tackle financial barriers to the transition. Steps will include making more green and transition finance available. This will help clients on a path to net-zero while maximising the benefits of a just transition for people and communities.