A group of market participants - including the world's biggest bond investor Pacific Investment Management Co., or Pimco, and British asset manager Legal & General Investment Management Ltd., said banks should be more serious about funding activities that don't encourage zero emission goals.
A big problem in the banking and finance industry is that "too many banks are failing to consider climate harm when they make financing decisions," Sarasin & Partners LLP chief of stewardship Natasha Landell-Mills said.
Despite climate change goals set by some big banks, a lot of lending still goes to "carbon-intensive activities," Landell-Mills said.
The Institutional Investors Group on Climate Change, which manages $11 trillion in assets, told banks to set tougher targets by 2050 or even earlier.
Several big international banks have already promised to increase spending in green energy. However, the investor group said promises weren't enough and there should be more investigation when lending to projects or companies that don't support the transition to low-carbon activities.
In its recommendations the group of 35 investors named 27 banks that needed to commit to the goal of eliminating emissions.
Banks are the biggest lenders to much of the world economy - thus giving them responsibility in limiting emitting activities if they set rules borrowers must meet.
The financing of land-use change, fossil fuel use and deforestation worry the investors' group the most. Critics and investors want banks to stop funding projects that don't display concrete evidence about transitioning to zero emissions.
Five years have passed since the Paris Agreement was sealed and, at this point, the banking industry should start "walking the walk," the investor's group's chief executive Stephanie Pfeifer said.
The group and other investors have questioned banks that committed to supporting the Paris accord on why fossil-fuel lending hasn't been mentioned in their goals.
Aside from setting clear targets and stricter goals before lending to fossil-fuel activities, the investors' group requested banks provide detailed assessments of financing activities that result in greenhouse gas emissions.
Meanwhile, some banks have started providing more information about plans for sustainability and climate action.
Last week, JPMorgan Chase & Co. said it would set aside $2.5 trillion within the next 10 years for solutions to climate change. The plan includes billions in cleaner technology and renewable energy.
A recent report revealed the bank's overall fossil fuel financing reached $317 billion between 2016 and 2020 - the biggest accumulated amount in the circle of big international banks.
Last year, Citigroup Inc. said it would dedicate $250 billion within the next five years to finance climate-change solutions. Its investment bank and financial services arm Citibank is second only to JPMorgan in fuel financing, according to the Banking on Climate Chaos 2021 report.
