How the Biggest Banks Are Addressing ESG

As demands from shareholders and customers increase, banks have been taking action to address their environmental, social and governance (ESG) issues that go beyond pure financial concerns.

TD Bank has said it will link senior executive compensation directly with its ESG performance as part of its drive to embed climate-related considerations into its businesses.

The bank has also set a target to achieve net-zero greenhouse gas (GHG) emissions associated with its operations and financing activities by 2050. It plans to establish GHG emissions baselines across its business and financing portfolio and work closely with clients as it sets interim GHG reduction goals on the path towards 2050.

TD Bank will report on its progress annually from this year.

Truist Financial Corporation has issued its first social bond, raising $1.25 billion to support its ESG strategy in late February. The net proceeds will be dedicated to new and existing eligible social programs, including investments in affordable housing and enhancements to essential non-profit services for communities in need.

JPMorgan Chase also issued its first social bond last month, raising $1 billion through fixed-to-floating rate notes maturing in 2025.

Under the firm’s Sustainable Bond Framework, it will allocate the net proceeds to activities that promote economic development by financing small businesses in low- and moderate-income (LMI) geographies. The money will also support affordable housing and projects that promote access to education and health care in LMI areas.

Goldman Sachs is also tapping the bond market, raising $800 million from a sustainability bond to accelerate its work on climate transition and advance inclusive growth across nine core thematic areas.

These areas include clean energy, sustainable transport, sustainable food and agriculture, waste and materials, ecosystem services, accessible and innovative healthcare, accessible and affordable education, financial inclusion, and communities.

The bond offering is aligned with Goldman Sachs’ broader integration of these themes across the businesses and will further expand the bank’s role in catalyzing capital to address the pressing environmental and social issues facing society today.

Just over a year ago, the financial services giant developed a framework that focused on climate transition and inclusive growth. To demonstrate the depth of this commitment, it said it would target $750 billion in financing, investing, and advisory activity by 2030.

It also put a ‘Sustainable Finance Group’ in place, responsible for coordinating the sustainability effort across the company as well as launching dedicated sustainability councils within each business led by a senior leader.