World Resources Institute, August 14, 2024, Banks Have Committed To Net Zero But Aren’t On Track To Reach It
Banks themselves don’t produce a lot of direct greenhouse gas (GHG) emissions. But they do wield the power of financing. By prioritizing lending toward climate solutions and phasing out harmful financing, such as for fossil fuel expansion and businesses driving deforestation, banks can play a critical role in reducing emissions in just about every sector of the economy.
This is particularly true when it comes to financing green solutions. The world needs to rapidly raise capital for things like renewable energy, clean transportation, low-carbon buildings and more, and banks have a special capability to generate credit “out of thin air” thanks to their public backing. There are constraints on how much money banks can create, but they have enormous potential lending capacity which doesn’t hinge on previously saved private capital.
