WHEREAS: Capital One Financial Corporation (“Capital One”) recognizes numerous physical and transition risks of climate change to their operations in their 2022 ESG Report, and investors applaud Capital One’s 2030 commitment to reduce Scope 1 and Scope 3 (category 1–14 only) emissions by 50 percent from the bank’s 2019 baseline. However, investors remain concerned that Capital One’s delay in setting a net zero commitment for its lending and investment activities signals lagging climate action.

Capital One has substantial exposure to the real estate, commercial and industrial sectors through its commercial banking loans and investments. The real estate sector accounts for nearly a quarter of all greenhouse gas emissions in the United States,1 and an analysis shows that some of the largest sources of GHG in the real estate sector are small-medium-sized retail and multifamily properties — all property segments much more likely to be financed by smaller regional banks such as Capital One, as opposed to large national banks.

Research shows that, on average, a financial institution’s financed emissions are 700 times greater than its direct emissions,2 indicating that Capital One is addressing only a fraction of its total climate risk. The Intergovernmental Panel on Climate Change says global greenhouse gas (GHG) emissions must be cut by 45% by 2030 to achieve net zero by 2050 and meet the Paris Agreement’s goal to limit warming to 1.5 degrees Celsius and avoid the worst impacts of climate change. Every incremental increase in temperature above 1.5°C will entail increasingly severe physical, transition, and systemic risks to companies, investors, the markets, and the economy as a whole. Capital One may face serious business risks associated with financing projects or companies that lack alignment with the Paris Agreement’s goals.

In contrast to Capital One, competitors have taken steps to address Scope 3 emissions. Regional banks Truist Financial Corp3 and U.S. Bancorp4 have both announced a goal to achieve net zero GHG emissions by 2050 and disclose 2030 targets for selected carbon-intensive industries in their portfolio.