By Alastair Marsh, Bloomberg
On the surface, Deutsche Bank AG, Citigroup Inc., and Mizuho Financial Group Inc. all appear to be delivering on their promises to cut carbon emissions.
The three banks (along with most of their peers) have committed to eliminating financed emissions—the greenhouse gas pollution enabled by their lending and investing—starting with the most carbon-intensive areas of their balance sheets. And in sustainability reports published this year, all three banks said those numbers had come down—in some cases significantly.
Yet if you read the footnotes, one would discover that their emissions have fallen in large part due to technical factors outside of their control.
Just last month, Deutsche Bank reported that emissions associated with its lending to oil and gas companies—the primary perpetrators of global warming—declined 29% from the prior year. As a result, the bank is much closer to its 2030 target for reducing financed emissions from the sector.
How did this happen? The war in Ukraine may have played a part. The German lender said the reduction was “predominantly explained” by three factors, the biggest of which being a decrease in the size of its loan books after ending relationships with Russian clients. But additional factors were changes in exchange rates and the increasing market value of its fossil-fuel clients.
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