“This transition to a low carbon economy is real. And we want to be inclined towards it, financing it and helping our customers, rather than ignoring it,” said Jon Weiss, CEO of corporate and investment banking at Wells Fargo, CNN The deal.
Forest fires and extreme floods are bad for business
Wells Fargo is viewing the climate crisis in part as a matter of risk management.
“You don’t have to be a scientist to realize that our customers are affected by changes in the climate,” said Weiss. “When a forest fire burns a large part of California or a flood that occurs once every five years, it poses a risk to people and businesses in its path.”
And Weiss pointed out that “it often seems that the impact of these climatic events falls on the most vulnerable parts of society that are unable to get out of their way or do not have the same type of stable housing.”
But Wells Fargo and other big banks are also under strong 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,” said Weiss. “And they are talking very loudly.”
As part of its climate goals, Wells Fargo promises to inject $ 500 billion into wind, solar and other sustainable financing projects by 2030. This marks an acceleration from the $ 157 billion that Wells Fargo claims to have invested in businesses and projects sustainable since 2012.
“The financial system is recognizing climate risk – and moving forward to address it,” said Danielle Fugere, president of As You Sow, a nonprofit organization that promotes corporate environmental and social responsibility. “This is an important signal for the entire economy.”
‘We made our share of mistakes’
“There is no doubt that we have made our share of mistakes – and perhaps more than our share of mistakes in the past,” said Weiss. “But we have also always been a company that cares deeply about the communities in which we do business. Perhaps what is changing is that we are trying to lead from the front, rather than perhaps silently from the shadows.”
Wells Fargo has been a big supporter of the energy industry in the past, a role that has sometimes turned the bank into a criticism lightning rod.
Why Wells Fargo is changing its tone
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 make the transition to a more sustainable future and reduce their emissions.
“It is a customer-oriented strategy, not a statement against our customers,” he said.
Weiss explained that Wells Fargo could, for example, still provide financing for shale oil or similar projects. But he said support would need to be measured in the context of trying to move the bank’s loan portfolio to a carbon neutral level.
Likewise, Wells Fargo has not yet said how it will achieve this long-term goal. The bank said it plans to set and disclose interim targets for selected carbon-intensive businesses – including oil, gas and the energy sector – by the end of 2022.
Likewise, Wells Fargo said he will set and disclose targets for additional sectors within a “reasonable time” after disclosing financed emissions to those sectors.
Wells Fargo has decided to make his announcement now, Weiss said, due to the urgent nature of the crisis.
“We were compelled by a sense of responsibility,” said Weiss, “that if we don’t start now, we will only be much later trying to help our customers and society to tackle this problem.”