By Simon Jessop and Tommy Wilkes
LONDON (Reuters) – Standard Chartered Plc said on Friday it has changed its target for curbing carbon emissions associated with its loans to oil and gas companies, ditching a methodology that critics say allows climate-damaging emissions to rise.
The Asia, Africa and Middle East-focused bank had previously set a 2030 target to reduce the emissions ‘intensity’ of loans to the sector by 30% from 2020 levels.
Emissions intensity measures carbon emissions as a percentage of business activity, such as revenue. As a result, carbon emissions can increase in absolute terms even when emissions intensity goes down, because businesses can become more efficient in reducing emissions and still emit more in total when their activity goes up.
Standard Chartered said in a policy update it now aimed to cut emissions by 29% in absolute terms by the end of the decade from 2020 levels, a target it said was in line with the International Energy Agency’s landmark Net Zero Emissions by 2050 Scenario.
Many sustainability experts and environmentalists have criticised using carbon intensity as the primary gauge of carbon emissions in the sector, arguing it allows companies to hide behind partial progress in reducing emissions. Proponents of the metric say it encourages companies to cut emissions while leaving room for their business to grow.
According to a report by non-profit ShareAction in October 2022, more than a third of 31 banks with oil and gas targets it assessed used an intensity metric, including the world’s biggest lender, JPMorgan Chase & Co.
Banking peers that have adopted an absolute emissions reduction target include HSBC and Citi, as well as a number of smaller banks.
“Setting this absolute sector target and supporting our clients in their transition journey are critical sustainability priorities for Standard Chartered,” Chief Sustainability Officer Marisa Drew said.
U.N. climate scientists have warned time is running out to forestall the worst impacts of climate change, putting pressure on the world’s biggest banks to do more to help curb carbon emissions.
Standard Chartered’s oil and gas sector loans were associated to emissions of 13.1 million tonnes of carbon dioxide equivalent as of 2020, which it aims to reduce by 3.8 million tonnes by 2030 to be in line with the net-zero trajectory.
While aiming to prioritise renewable or green energy sources “wherever practical”, some markets would struggle to go straight to the cleanest forms of energy and lower emission-intensity fuels such as natural gas would still have a role to play, Standard Chartered said.
(Reporting by Simon Jessop and Tommy Reggiori Wilkes in London; Editing by Greg Roumeliotis and David Gregorio)
