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The Transition Finance Imperative Part Two: A Conversation with Simon Cooper

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17 Nov 2021

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Transitioning emerging markets and carbon-intensive industries is vital to realize net zero. Simon Cooper, our CEO of Corporate, Commercial & Institutional Banking and CEO of Europe & The Americas, outlines our new targets which will help mobilize capital, accelerate climate solutions and reduce emissions to help deliver a just transition.

In March, Simon Cooper, Chief Executive, Corporate, Commercial & Institutional Banking and Chief Executive, Europe & Americas at Standard Chartered spoke about a new strategic direction for the bank in transitioning to net zero. In October, Standard Chartered announced targets to reach net-zero carbon emissions from its financed activity by 2050, including interim 2030 targets for the most carbon-intensive sectors.

In this conversation, Simon answers questions about the new targets and ever-growing commitment to sustainability and its challenges.

Q1: How does Standard Chartered plan to reach net zero?

We developed a three-pronged plan that entails mobilising capital, developing new financial solutions and reducing emissions.

Our clients are striving to achieve their net zero targets, and each is at a different stage in their journey. We will mobilise USD300 billion in green and transition finance to help them get there. We also recognise that today’s financial solutions leave many transition needs unmet. To fill the gaps, we will innovate new financial products and build a dedicated team to guide clients in high-emitting sectors in their transition journeys.

On the emissions front, we will reduce the emissions associated with our financing activities to net zero by 2050. We’ve also set 2030 interim targets in our most carbon-intensive sectors.

Q2: What are Standard Chartered’s emissions reduction targets?

A bank’s commitment to net zero is only as good as its portfolio. Earlier this year, CDP published a report that shows how banks produce 700 times more emissions from their loan books and investment portfolios than they do directly. We must all do better.

We’re committed to investing sustainably and ensuring that our clients are making a concerted effort to reduce their emissions. We measured the absolute financed emissions baseline of our corporate lending portfolio to better understand where we are now and how we can improve. We then used that baseline to set the reduction targets outlined in our Net Zero whitepaper.

Our targets will reduce the revenue-based carbon-intensity for the highest-emitting sectors in our portfolio through 2030. We are targeting a 63 per cent reduction in the power sector, 33 per cent for steel and mining, and 30 per cent for oil and gas. We will also stop financing companies that are expanding in thermal coal.

Q3: Standard Chartered aims to make achieving net zero a “just transition”. What does that mean to you and why it is important?

Standard Chartered’s primary footprint is in emerging markets across Asia, Africa and the Middle East. Many of these communities depend on fossil fuels for economic growth and will for the foreseeable future. In fact, 29 of the 59 countries that we operate in have not yet made a 2050 net zero commitment. While the need to act is urgent, we must find the right balance to ensure that people in these markets can improve their lives.

Our plan extends beyond emissions targets to galvanise our partners and clients to action. We will guide them by deploying a Transition Acceleration Team—a dedicated team of bankers to support clients in high-emitting sectors. The team will provide our clients with expertise on how to accelerate their low-carbon transition and tools to measure their progress. And behind that, our updated Transition Finance Framework, aligned to the International Energy Agency’s Net Zero Energy 2050 scenario (NZE), will ensure that our efforts align with the best information currently available.

While I am excited about our new roadmap, I would like to point out that our intention is not new. Standard Chartered has been financing the energy transition for some time. A recent example is in Bangladesh where we helped fund the country’s first utility scale solar plant. The plant has an installed capacity of 28 MWp and will reduce carbon emissions by 400,000 tonnes over 20 years.

Q4: Where are the opportunities?

According to our Zeronomics report, the vast majority of executives and investors expect the most significant net zero transition capital shortfall to occur in emerging markets. Overcoming that shortfall is crucial to realizing net zero. That creates huge challenges but also significant opportunities.

Last year, we identified USD10 trillion in private-sector investment opportunities across 15 emerging markets in our Opportunity 2030 report. Most of those opportunities are connected to the net-zero transition. Our presence in these markets gives us a good chance to ensure that economic development continues at pace while climate impact is reduced. In short, we can catalyse change in a meaningful and sustainable way.

Produced by Bloomberg Media Studios in partnership with Standard Chartered.

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