“This transition to a low-carbon economy is real. And we want to lean on it, finance it and help our clients through it, instead of ignoring it,” said John Weiss, CEO of Corporate and Investment Banking at Wells. Fargo, in front of CNN Business.
Forest fires and extreme floods are harmful to business
Wells Fargo views the climate crisis in part as a matter of risk management.
“It doesn’t take a scientist to notice that our customers are affected by climate change,” Weiss said. “When a forest fire burns much of California or a once-a-century flood occurs every five years, it poses a risk to people and companies along the way.”
And Weiss pointed out that “all too often, the burden of these climate events seems to fall on the more vulnerable sections of society, who either can’t get out of their way or don’t have the same type of stable housing.”
But Wells Fargo and other large banks are also under severe pressure from investors who want to support companies that are seen as part of the solution, not the problem.
“What is important to our investors is important to us. Ultimately, they own our company,” Weiss said. “And they talk pretty loud.”
As part of its climate goals, Wells Fargo promises to pump $ 500 billion into wind, solar and other sustainable financial projects by 2030. This marks an acceleration of $ 157 billion Wells Fargo says it has invested in sustainable business and projects from 2012.
“The financial system recognizes climate risk – and focuses on tackling it,” said Daniel Fugere, president of As You Sew, a non-profit organization that promotes environmental and social corporate responsibility. “This is an important signal for the whole economy.”
“We made our share of the mistakes”
“There is no doubt that we have made our share of mistakes – and perhaps more than our share of mistakes in the past,” Weiss said. “But we’re also a company all the time that cares deeply about the communities we do business in. Maybe what’s changing is that we’re trying to lead the way, instead of maybe quietly out of the shadows.”
Wales Fargo has been a major player in the energy industry in the past, a role that sometimes makes the bank a lightning rod for criticism.
Why Wells Fargo changes its melody
Despite Monday’s announcement, Wells Fargo is not saying goodbye to the fossil fuel industry. At least not yet.
Instead, Weiss said, Wells Fargo plans to help its customers move to a more sustainable future and reduce their emissions.
“This is largely a customer strategy, not a declaration against our customers,” he said.
Weiss explained that Wells Fargo could, for example, still provide funding for shale oil or similar projects. But he said support would have to be measured in the context of trying to move the bank’s loan portfolio to a carbon-neutral approach.
Similarly, Wells Fargo does not yet say how it will achieve this long-term goal. The bank said it plans to set and announce intermediate targets for selected carbon-intensive companies – including the oil, gas and energy sectors – no later than the end of 2022.
Similarly, Wells Fargo said it would set and announce targets for additional sectors within a “reasonable time” after disclosing funded emissions for those sectors.
Wells Fargo has decided to announce this now, Weiss said, due to the urgency of the crisis.
“We were forced by a sense of responsibility,” Weiss said, “that if we don’t start now, we’ll be so late, trying to help our customers and society deal with this problem.”