Only transparency about emissions will stop the angry shouts of climate protesters
What do ABBA, top hats and champagne all have in common? For starters, they all made an appearance at HSBC’s recent annual general meeting of shareholders. A vocal group of climate activists upended the global bank’s proceedings when they descended on Southbank’s Queen Elizabeth Hall wearing top hats, sipping from champagne flutes and even breaking into a rendition of ABBA’s “Money, Money, Money”. Their charge? HSBC’s climate goals do not go far enough and the bank must stop “financing climate change” through its investments in fossil fuel companies.
We are currently in the season of annual general meetings. This is the time of the year when company shareholders convene to discuss the state of the business and vote on important questions. Increasingly, these meetings have become the new platform for climate activism.
Similar to the hijinks at the HSBC meeting, protests led by the activist groups Extinction Rebellion and Money Rebellion broke out at fellow banks Barclays and Standard Chartered’s AGMs last week. The banks “are more interested in their profits than a habitable planet,” contended Aidan Knox, a student demonstrator. These protests are part of a growing movement in the UK, where over 600 people have been arrested over the last two weeks alone for protesting government investment in new oil and gas projects.
The demonstrations underscore growing frustration with the lack of action from corporations and their financial backers on the climate crisis. Anger is rising over perceived broken net zero promises as companies struggle to make progress. One particular roadblock for companies has been accurately reporting the full extent of their emissions. Regulators in the UK are responding with new rules requiring large companies to disclose not only their direct emissions – called Scope 1 and 2 – but also indirect emissions – Scope 3 – from a company’s value chain.
The issue with climate disclosures, especially for Scope 3 emissions, is often not one of willingness but of data availability. Many companies find it enormously difficult to quantify upstream and downstream emissions because it requires getting data from customers and suppliers that is often hard to come by or not there at all.
Investors and banks face similar, if not more challenging, difficulties when calculating their indirect carbon impacts. According to the sustainability charity CDP, the carbon impact of investments from financial institutions averages 700 times larger than their direct footprint. Yet until recently, the tools to measure these “financed emissions” have been non-existent. A new standard called the Partnership for Carbon Accounting Financials (PCAF) solves this problem with accounting rules to allocate the carbon impacts of investments, loans and other financial transactions. By combining the PCAF standard and cutting-edge software, banks like Barclays – that have previously ignored Scope 3 emissions – now have the tools to respond to climate activists and make good on their climate goals.
Scientists warn that urgent action is needed to address the climate crises. The protestors will get louder as enterprises and financial institutions continue to drag their feet. But, with the coming regulations and new software platforms being able to provide instant, accurate data, we can finally hope for change to be on the way. Till then, expect more off-key ABBA songs by climate activists in top hats at annual shareholder meetings.