LLOYDS, NATWEST, AND HSBC UNDER FIRE – The UK lenders relied on flawed net zero study which influenced their corporate lending decisions
Some of Britain’s largest lenders, including Lloyds, NatWest, and HSBC, are facing intense criticism for relying on a significantly flawed net zero study that may have influenced their corporate lending decisions.
The banks used climate research from the Network for Greening the Financial System (NGFS), which recently warned that some of its core analysis was based on an inaccurate academic paper that has since been retracted. Lloyds, NatWest, and HSBC have all confirmed their use of the NGFS research, with some departments utilizing it to scrutinize which sectors are most financially exposed to the net zero transition.
The flawed research originated from a paper by the Potsdam Institute for Climate Impact Research. It made several extreme predictions, including that climate change would cost the global economy £28 trillion annually by 2049, and that global economic output risked plunging by as much as 62% by 2100 if carbon emissions continued unchecked.
The Bank of England noted last year that banks were increasingly using these types of climate forecasts to determine which businesses receive loans, partially to align with net zero goals.
