Modeling the Carbon Emissions of Financial Institutions, Emily Cruz, UG '22 (3951276)
Global carbon emissions must reach around net-zero by 2050 to mitigate the most significant repercussions of global climate change. This will require a coordinated effort between governments, individuals, and private institutions. This includes financial institutions, whose financing in the coming years will directly influence the future energy mix. Many financial institutions have touted goals to become net-zero and have made policies to that end. These policies include divesting from certain kinds of fossil fuels, committing to invest in renewable energy products, and developing “sustainable" financial products so that consumers can invest in more sustainable or renewable ventures. This research seeks to evaluate the financing policies that financial institutions have announced toward fossil fuel industries and sustainability ventures and to gain a preliminary understanding of how these policies may influence future carbon emissions. To conduct this research, data on bank policies were compiled, evaluated, and used to model future financing for fossil fuel industries. The cumulative sustainability commitments were also collected and visualized. It was projected that fossil fuel investments would increase across most banks. The greatest increase was in investments to companies expanding their production or utilization of fossil fuels. There was a slight decrease seen in some banks' carbon emissions intensity, likely due to the change in sectoral financing composition overtime. This research highlights the importance of having strict guidance for banks' fossil fuel financing so that they can implement policies that will reach 2050 net-zero goals rather than policies that amount to “greenwashing" tactics.