Environmental non-profit Reclaim Finance has issued recommendations to financial institutions (FIs) for “robust” transition plans, also identifying “red flags” to rule out “clearly inadequate” efforts. The research deemed the 20 largest European banks to be “light years away” from setting transition plans that end fossil fuel finance, with only a handful of FIs – including banks, asset owners and managers – cutting back investment in the sector. Reclaim Finance noted that claims from banks to be providing transition finance are undermined by the fact that 72% of the financing to the six biggest European oil and gas companies went to fund fossil fuels between 2021 and 2023. The briefing lays out essential criteria for FIs’ climate transition plans, including decarbonisation targets and strategies, public and private engagement, reporting and governance, and biodiversity and the just transition. It also highlighted major gaps and shortcomings in potential plans. “To chart a new course, we need a new map and [by] providing sufficient ambition, robustness and enforcement, climate transition plans can play that role,” Reclaim Finance said. “Transition plans are progressively becoming one of the main criteria to assess how [FIs] tackle – or fail to tackle – climate change in their strategies.” Separately, NGO ShareAction has called on the CEOs of Europe’s 20 largest banks to set science-based targets showing how they are funding sectors crucial for the net zero transition, such as renewable power and green infrastructure and technologies. In letters sent to the CEOs, ShareAction warned that the banks face shareholder action if they fail to meet investor expectations of “urgent progress” to address the issue.
