We’re still building the global frameworks for companies to report their progress in greening their products and operations. But some early returns are coming in – and showing that trail-blazing companies do exist and are starting to change the world.

This fall, Corporate Knights and U.K.-based financial publication The Banker collaborated to produce the 2023 Sustainable Banking league table, the second annual ranking monitoring how global banks are helping finance the green transition. This year, the study wrested sustainability-based data out of 87 banks participating in the U.N.-organized Net Zero Banking Alliance (NZBA) – up from 60 last year.

The good news? In fiscal 2022, these banks earned a hefty US$53 billion in sustainable revenues from their loan books, investment portfolios and underwriting and advisory services.

Better still, these 87 banks posted a total outstanding sustainable loan book of nearly US$1.1 trillion, a 55% increase over 2021. Their underwriting of sustainable bonds and providing sustainable advisory services reached nearly US$1.5 trillion this year, up 144%.

Some of the increases in green financing stem from a growing willingness on the part of banks to disclose their sustainability-related details. But unlocking these trillion-dollar levels demonstrates just how much business is in the green economy – and should encourage more bankers to up their games.

In first place, for the second year in a row, is Vancouver-based Vancity, with a sustainable revenue ratio of 24.3%. The values-based co-op earns significant revenues from loan-support services that help high-emitting clients improve their emission measurement and reporting practices – demonstrating the new opportunities that leadership provides.

Asked to comment on the bank’s best-in-class performance, Jonathan Fowlie, the chief external relations officer who leads Vancity’s impact-strategy division, turned the focus on people and planet. “When a financial institution prioritizes sustainability, its impact resonates throughout the broader economy and helps to create a better future for us all.” He hopes other institutions will catch up soon: “There’s no time to delay our journey towards a more sustainable society.”

Runner-up this year is Germany’s ProCredit Holding, which serves small and medium-sized businesses mainly in eastern and southeastern Europe and in Ecuador. In its first year on the list, ProCredit earned a sustainability revenue score of 22.2% – just ahead of third-place Netherlands’ Triodos Bank. Triodos posted a sustainable ratio of 21.3%, based on its lending activity in sectors such as organic foods, renewable energy and environmental technologies.

The bad news is that trillions in financing are still going to oil and gas. In fact, in the seven years since the Paris climate agreement was signed, the 60 biggest banks in the world contributed US$5.5 trillion to the financing of fossil fuel projects, according to a report released earlier this year by the Rainforest Action Network. Fossil fuel financing is dominated by a handful of banks in the United States, Canada and Japan, the report notes, with RBC appearing for the first time as the leading financier to the industry, providing a whopping US$41 billion in 2022.

Another report, released in September by ActionAid, looked specifically at fossil fuel financing in the Global South and found that some $3.2 trillion has flowed to those operations since 2016.So where does RBC stand when it comes to financing sustainable solutions? It ranks middle of the pack, in 40th place, well behind rivals Vancity and BMO (22) – but ahead of National Bank (45), Scotiabank (46), TD (77) and CIBC (86).

“While we have seen significant increases in the size of the sustainable loans, when we compare these figures to the financing being provided to the fossil fuel industry by the 60 largest banks in the world, it is evident the industry has a long way to go,” says Matthew Malinsky, research manager at Corporate Knights. “Banks need to slash their fossil fuel financing and immediately abolish any funding to expansion projects, while continuing to increase their exposure to projects funding the transition to the low-carbon economy.”

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For the first time, we can see a pattern emerging. Corporate Knights has teamed up with the U.K.-based financial publication The Banker to produce the world’s first list of green-ish banks ranked by the percentage of revenues they earn through sustainable lending, underwriting and investments. The 2022 Sustainable Banking Revenues Ranking shows global bankers are off to a slow start, but over time it will help guide consistency of reporting and provide an ongoing window into bankers’ progress in meeting the world’s Paris Agreement commitments.  

Corporate Knights researchers ranked 60 banks for which they found quantifiable sustainable-revenue data from an initial pool of 91 banks. Corporate Knights ranked these banks based on their income from sustainable financing activities as a percentage of total revenues, not by total sustainable revenues, to use a more direct comparison and allow smaller institutions to compete head-to-head with global giants.  

In first place is Vancouver-based Vancity, a community-first credit union that boasts a sustainable revenue ratio of 34.13%, nearly 50% higher than that of the runner-up, Norway’s SpareBank 1 Østlandet, with 23%. 

“Being member-owned has shaped us over the decades,” Vancity president and CEO Christine Bergeron told The Banker. “We’ve always had core pillars around environmental sustainability, social equity and cooperative values, and we’ve continued to lean into those values in our activities.” 

In third spot with a ratio of 19.47% was another mission-focused institution, union-owned Amalgamated Bank, which calls itself “America’s socially responsible bank.”  

These rankings will likely change quickly as the energy transition ramps up and big institutions compete to participate in new electrical grids, factory retoolings and infrastructure upgrades.  

Fourth-place Intesa Sanpaolo Group is Italy’s leading banking group, with 3,700 branches and 13.5 million clients. Elena Flor, Intesa’s head of ESG and sustainability, tells The Banker her bank has already integrated social context into its operations: “We act not only on the basis of profit, but with the objective of comprehensive long-term value creation for all our stakeholders, including our commitment to the reduction of climate-change impact and social inequalities.”  

To qualify for the ranking, banks must have signed up to the UN’s Net-Zero Banking Alliance (NZBA), which means they commit to achieving net-zero lending and investment portfolios by 2050. Firms on the list must also have committed to reporting climate-related activities through the Task Force on Climate-Related Financial Disclosures framework, designed to boost transparency and ensure that opportunities and risks related to climate will become a natural part of firms’ planning and risk-management processes.  

However, there is always room for improvement, even among these leaders, and especially when it comes to disclosing specifics in their sustainable financing commitments. Corporate Knights researchers found it was hard to distinguish banks’ revenues from sustainable investments because of the lack of detail and the lofty big-picture nature of the commitments they’ve made. “In an ideal world,” explains Matthew Malinsky, research manager at Corporate Knights, “we’d look at banks’ annual audited financial statements and see the specific outstanding exposures to sustainable activities on the loan book and the investment book, as well as any new additions throughout the reporting period.” 

Adds Malinsky, “We’d also see the underwriting activity to sustainable companies or sustainable activities, and we’d know interest, fees and other income earned from these activities. Finally, we’d be clear on which definitions were being used and which taxonomy the definitions were derived from.”  

Corporate Knights researchers also found that banks are achieving only a fraction of the financing needed for the energy transition.  

Based on an analysis by management consulting firm McKinsey that found the world needs US$9 to $10 trillion in annual financing to meet Paris Agreement targets, Corporate Knights estimates that approximately 5% of total global banking assets will need to be allocated to sustainable finance on a revolving basis. The total outstanding sustainable loan book of the 60 banks in the ranking is US$687 billion, approximately 1% of their total loan (based on their disclosures that can be quantitatively vetted).   

“The climate-action revolution must be funded or it won’t happen,” says Toby Heaps, co-founder and CEO of Corporate Knights. Heaps hopes the list will help bankers, governments and climate-watchers track the progress of the clean energy revolution. “We now have a critical mass of banks – 40% of global balance sheets – represented in the NZBA, committed to playing their role in financing and making climate transition a reality.” 

Ranked by total sustainable revenues, Intesa Sanpaolo places first on the list, with US$3.68 billion, followed by New York City–based Citi at US$2.18 billion and France’s BNP Paribas with US$1.51 billion. All three firms claim they have adopted sustainability and supporting the net-zero transition as key objectives.  

Karoline Bakka Hjertø, head of sustainability at SpareBank 1, believes green banking is just beginning to take off. “I think it is impossible to work within sustainability – in any industry – and be happy about the speed of activity,” she told The Banker. “We all agree that change needs to happen faster, and that really this work should have started decades ago.” 

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