After the legal success against Shell, Milieudefensie now wants to file a case against a party from the financial sector for lack of climate action. The action group will announce which institution exactly in January.
Milieudefensie states that companies in this sector are harmful with their loans and other services to polluting companies. A critical report from the Amsterdam research agency SEO on behalf of Milieudefensie will be published on Tuesday. It states that it is likely that the plans of most of the seven financial institutions examined fall short of sufficiently limiting global warming.
This concerns the banks ABN Amro, ING and Rabobank, pension funds ABP and Zorg & Welzijn, general insurer NN Group and credit insurer Atradius.
The seven institutions will be given the opportunity by Milieudefensie in the coming months to improve their climate policy and announce concrete actions. The action group says it will then make the final choice on January 19 for a financial institution that will summon it.
This would be the first company that, after the legal success of Milieudefensie against Shell in 2021, would also have to answer for its climate policy in court. The court in The Hague ruled at the time that the oil giant had to reduce greenhouse gas emissions much faster than it had planned. Shell must be CO by the court2emissions by a net 45 percent by 2030 compared to 2019, in line with the Paris climate agreement. Shell itself had no role in the realization of that climate agreement, but was nevertheless held to it.
Since then, Milieudefensie has used the threat of another Shell case to put pressure on other companies. For example, in January last year, 29 companies received a ‘letter’ from the NGO demanding that they come up with a climate plan to indicate how they will comply with the Paris climate agreement. With the agreement, governments have committed to limiting global warming to 1.5 degrees.
Financial sector has ‘key role’
All the while, Milieudefensie also says that a possible new lawsuit is a possibility. The environmental action group is now targeting the financial sector because it “plays a key role in solving or worsening the climate crisis.”
Milieudefensie does not want to reveal the precise legal plan of attack, but it would broadly approach the case “in the same way as the Shell case,” says Nicky van Dijk, researcher at Milieudefensie. The court convicted Shell on the basis of its legal duty of care, for example not to create a danger (in this case with climate change). “We expect,” says Van Dijk, “that it is actually a comparable case, since the financial sector’s share in the climate crisis is so large.”
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To substantiate a subsequent case, Milieudefensie has already had research conducted into the climate ambitions of 29 companies by the German NewClimate Institute in 2022. Using the same method – based on public sources – SEO has now repeated that research for the seven financial institutions.
The research by first NCI and now SEO looks at two things: how transparent the institution is about climate goals, and how adequate the climate plans are. For example, do climate goals apply to all loans, or only the new ones?
Compared to 2022, SEO has actually seen few changes. Most institutions are reasonably open about their own direct emissions (such as emissions from their own buildings), but they are less open about the most important polluter – their indirect emissions, which arise from financing. This concerns, for example, emissions from a new factory for which a loan has been granted for construction, or, for example, the emissions from an exporter to whom credit insurance has been provided. It also concerns financial services, such as helping to issue bonds and shares.
When it comes to setting reduction targets, the financial companies are still doing reasonably well, with concrete targets from, for example, ABP. All banks have committed to the ‘Net-Zero Banking Alliance’, in which banks promise to make the economy climate neutral by 2050. NN has done the same in the ‘Net-Zero Insurance Alliance’ – credit insurer Atradius has just withdrawn from it.
Milieudefensie points out that many stated goals are ‘only’ intensity goals: they promise to reduce emissions per euro financed or per car kilometer. If the number of euros or kilometers financed subsequently increases significantly, emissions may still have increased in absolute terms. According to Milieudefensie, only ABP has set a clear and absolute reduction target: 50 percent for 2030 for both its own emissions and those of the companies they finance.
Uncontrollable
Following SEO’s research, Milieudefensie is also very critical of the ‘action plans’ of financial companies: what are they doing specifically to reduce emissions from themselves and especially from the companies they finance? Van Dijk: “Banks, insurers and pension funds lack a clear escalation plan that shows: first we require greening, companies do not comply, then this is the next step. So in other words: when is the limit full and will they stop financing? This is not fixed for the outside world and is therefore not verifiable.”
Prior to the publication of Milieudefensie’s report, the financial institutions were not given insight into the final ‘scores’ and were not informed that legal action was threatened against any of them. NRC has asked a selection of the institutions, ING, Atradius and Rabobank, to respond to a summary of the report’s findings.
Credit insurer Atradius, of which the report is most critical, states that it “aims” to have its “insurance portfolio reach net zero emissions by 2050.” To achieve this, the company sets scientific goals, it writes, and is in “permanent dialogue with our customers.”
ING said in a response that it disagreed with the ‘bankers’ view of the climate crisis’. Achieving a low-carbon future is “not easy and not something you can do overnight,” according to the largest bank in the Netherlands. In their response, both ING and Rabobank criticized the method that Milieudefensie advocates. ING: “Do you achieve your goals by disinvesting across the board, which reduces emissions from the bank’s loan portfolio, or do you help your customers become more sustainable by financing new technology, such as electric cars?” Rabobank states that it has indeed taken steps since 2022, while this is not reflected in the scores that SEO has shared with the bank.
Next year will be an exciting year for Milieudefensie, when Shell’s appeal will also be due. That treatment is scheduled for April. In the complicated 2021 verdict, the court identified all kinds of factors that determine Shell’s liability, which resulted in the conviction. If the decision turns out in Shell’s favor on appeal, the NGO will still be left empty-handed.