Risks and Challenges
Like the insurance sector, banking is being directly affected by climate change. Due to the promulgation of carbon legislation, banks have to be more cautious when financing high carbon-emission projects, such as coal-fired power plants. Consequently, each prospective project holds considerable reputation, as well as financial, risks. Aside from the reputation and financial risks associated by being perceived as increasing the rate of climate change, litigation is also a real concern.
Carbon-emissions legislation and carbon taxation in the US and other countries will have a profound effect on the profitability of new ventures, which will also affect banks.
Internally, banks are also responsible for massive emissions through extensive employee travel and sprawling offices and branches. Ignoring this aspect of your business poses a risk to your reputation and can create the impression among clients that these integral parts of their financial institutions do not share their values.
Opportunities
Forerunners in the banking industry are creating opportunities in these tough economic times, despite the global financial recession and concerns over carbon-emissions legislation and funding high carbon-emissions infrastructure projects. Through energy and resource efficiency opportunities, banks are beginning to maximise their investment returns and exploiting the increased demand for renewable energy sources by funding such projects. By financing energy and resource efficient assets, banks are adhering to governmental policy that encourages spending on renewable resources. It also boosts global commitments through the Kyoto Protocol. Some banks are putting their money where their mouths are – HSBC, for example, has become the first 100% carbon-neutral bank in the world.
What can GCX do for you?
- Efficiency:
Through determining your carbon footprint and a business-case energy efficiency audit, GXC will assess your company’s carbon emissions and help you to set targets and budgets that suit your business. From here, GCX will help you to implement reductions and achieve your cost-cutting goals, which include education campaigns in your organisation to engrain climate-change awareness in your company’s culture and to ensure that employees support internal initiatives. GCX will also undertake to monitor your emissions on a continuous basis. The journey towards becoming a low-carbon business also offers significant PR and marketing opportunities that can be harnessed to differentiate your company as a climate-change leader.
- Increased competitiveness:
GCX will assist you in identifying lending opportunities in renewable energy infrastructure projects so that you can capitalise on this growth segment. Working with GCX, you will be able to guarantee that the assets you finance do not fall into the high-emissions category and that you will not run foul of carbon legislation and bear the resultant risk to your reputation and finances. It also offers you the opportunity to differentiate yourself as a climate-change leader, create new products and stimulate renewable energy financing products for a broad spectrum of business and private clients. With GCX, you will be able to reduce the risk of your client portfolio through detailed insight into the effects of climate change on sectors, industries and countries. GCX can examine any facet of your business and assist you in creating new products that will reduce the risk for both you and your customers.
- Adaptation:
Adaptation involves the adjustment of systems in order to respond to actual or expected weather events or their physical manifestation. These adjustments mitigate the harm or exploit the beneficial opportunities that result from these events. GCX can inform you about the impact that climate change will have on the sectors that you fund. High-risk industries include agriculture, mining, oil and gas, residential properties, transport and travel and tourism. Consequently, you will be able to structure your funding options according to the physical, legal and reputation risks that they represent, thus adding value to your products and enabling you to advise your clients as to how to reduce their, as well as your, climate-change risks.
- Legislation and reputation:
GCX will determine the effect that carbon laws will have on your business and identify the best ways to ensure your continued profitability, which also include establishing the reputation risks posed by being affiliated with a high carbon-emissions business. GCX will assist you in identifying sectors and assets associated with high risks, as well as helping you to develop policy through our extensive industry-based research.
