University of Edinburgh: Banks to help businesses get to net zero

The proposed pilot programme from Bankers for Net Zero – an initiative that aims to galvanise the UK banking sector on climate change – is a result of an eight-week scoping exercise at the University’s Smart Data Foundry.

The report is the first of its kind and outlines a long-term plan to define the role banks can play in creating awareness of greenhouse gas emissions and incentivising SMEs to reduce their carbon emissions.

Smart data
The Smart Data Foundry spearheads the safe sharing of financial data to tackle societal, economic and environmental challenges.

The Foundry is a collaboration between the University, FinTech Scotland and the Financial Data and Technology Association (FDATA).

Decarbonising SMEs
SMEs account for an estimated 52 per cent of UK private sector turnover and employ around 16.8 million people.

Encouraging SMEs to reduce their emissions is a critical goal in ensuring a ‘just transition’ – a framework to move to a more climate-resilient economy that also delivers fairness and equality.

Banks and policymakers are being urged to play a role in helping SMEs change their behaviours and reduce their carbon footprint.

Significant report
The report details plans to test the effectiveness of different mechanisms to engage with SMEs.

Plans include an inaugural pilot model, which would take place over 12 months and could be scaled up to SMEs across the UK.

The pilot exercise will serve as part of a recommendation to Government and regulators to ensure a level playing field in the transition to a low carbon economy.

HSBC UK funded the scoping exercise.

Countering climate change is the greatest challenge we face as a society, and banks can play a crucial role in creating awareness of the issue through effective measurement of carbon emissions from their SME clients. Measurement of SME emissions alone will not counter climate change, and banks have an important role to play by financing green investment, acting as catalysts for community efforts to reduce GHG, and playing a role in implementing government programs.

Martin Nel
Smart Data Foundry, University of Edinburgh