The Intergovernmental Panel on Climate Change says global greenhouse gas (GHG) emissions must be cut in half by 2030 and achieve net zero by 2050 in order to meet the Paris Agreement’s goal to limit warming to 1.5 degrees Celsius and avoid the worst impacts of climate change. At current emissions trajectories, an estimated 10% of global economic value could be lost by 2050.
Banks play a critical role in limiting global temperature rise, and they may face serious business risks associated with financing projects or companies that lack alignment with the Paris Agreement’s goals. Financing high-emitting activities poses systemic risks to the global economy, portfolio-wide risks to diversified investors, and serious risks to banks' own operations.

Bank of New York Mellon (BNY)’s financing includes servicing clients in the fossil fuel sector, most notably serving as administrative agent for a multi-year revolving credit facility for Southwest Gas.2 While BNY has set Scope 1 and 2 reduction targets in line with Science Based Targets initiative methodology, the Company does not yet measure or disclose the carbon footprint associated with its lending or investment activities, nor has it adopted targets to reduce these emissions. Research shows that, on average, financed emissions are 700 times greater than a financial institution’s direct emissions,3 indicating that BNY is currently addressing only a small fraction of its total climate impact.

In contrast to BNY’s lagging climate action, competitors have taken steps to mitigate their risk. Asset managers including BlackRock, State Street and Vanguard, have set interim GHG targets for their investments through the Net Zero Asset Managers initiative. Major banks like Wells Fargo and Citibank have set targets to reduce their financed emissions associated with high-emitting sectors like energy and power generation.

Investors applaud the progress made by two BNY subsidiaries, Insight and Newton, who have set interim targets through the Net Zero Asset Managers initiative but remain concerned that BNY has not yet made similar enterprise-wide commitments.