July 22, 2020 Read More →

Morgan Stanley commits to tracking climate impact of its lending activities

Politico:

Morgan Stanley will become the first major U.S. bank to publicly disclose the how much its loans and investments contribute to climate change, the latest sign that Wall Street giants are beginning to reckon with their role in heating the planet.

The move comes as financial regulators in many countries are considering whether to require greater disclosure from companies about the risks they face from climate change — and as a growing number of shareholders and investors worry about their exposure to fossil fuels that could suffer from future government policies to rein in greenhouse gas emissions.

“This is a journey, and I think that this is an incredibly important piece of it, because as we all know it’s harder to make people respond to something when there’s no data, it’s hard to have data when you don’t have measurement,” Audrey Choi, chief sustainability officer for Morgan Stanley and CEO of its Institute for Sustainable Investing, told POLITICO. “This is an important step towards getting more clarity.”

The bank is joining the Partnership for Carbon Accounting Financials, a global body with 66 financial company members managing $5.3 trillion of assets, that will count the greenhouse gas emissions from projects and investments that are financed by asset managers, banks and other institutions. Morgan Stanley will sit on the group’s steering committee to help deliver a final methodology for financial institutions to follow this fall.

Since 2016, 35 banks have poured $2.7 trillion into fossil fuel projects, according to environmental group Rainforest Action Network — and Morgan Stanley has accounted for nearly $92 billion of that total. Morgan Stanley declined to provide POLITICO details on the number of fossil fuel projects and assets are on its books.

Morgan Stanley hopes its effort to tally the greenhouse gas emissions from its investments will help it to develop new sustainable investing products for investors, said Matt Slovik, who heads the bank’s global sustainable finance team, noting the company has committed to financing $250 billion of low-carbon solutions by 2030. But he declined to say whether the bank would use the information to perform stress tests of how its portfolio would fare under varying climate scenarios.

[Zack Colman]

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