Morgan Stanley commits to net-zero financed emissions by 2050

Global banking firm Morgan Stanley has unveiled a new commitment to reach net-zero financed emissions by 2050, while new research reveals that while almost half of the FTSE 100 companies have net-zero commitments in place, they don’t yet have detailed strategies to reach these goals.

Morgan Stanley currently holds more than $2trn in client assets, growing exponentially from $546bn in 2008 during the financial crash. The new net-zero commitment will cover emissions from its financial portfolios and offerings.

“Climate change is one of the most complex and interconnected issues of our time,” said Audrey Choi, chief sustainability officer at Morgan Stanley. “Morgan Stanley believes we have an important role to play in facilitating the transition to a low carbon future, and we are proud to embark on this journey.”

In July, Morgan Stanley became the first US-based global bank to commit to measuring and disclosing the environmental impact of its investment portfolio and loan offerings. Morgan Stanley also became the first US bank to join the Partnership for Carbon Accounting Financials (PCAF) and its Steering Committee.

PCAF was launch in 2019 and consists of more than 60 banks and investors that represent more than $5.3trn in assets under management. PCAF is developing a global accounting standard to be used by financial organisations to help measure, disclose and reduce climate impacts.

Morgan Stanley’s announcement follows a mixed track record on climate action. In the last three years, the company has invested almost $100bn in fossil fuel companies and projects, as noted by the Rainforest Action Network.

The company was also named along with other asset management firms that were accused of collectively failing to drive alignment with the Paris Agreement in their business models and policy lobbying.

The report from non-profit InfluenceMap analysed how closely the portfolios of 15 of the world’s largest finance firms aligned with the Paris Agreement’s two pathways, and the ways in which these businesses have voted in climate-related resolutions and engaged in climate-related lobbying.

Morgan Stanley was ranked in the middle of the rankings, alongside the likes of Vanguard, State Street, BlackRock, JP Morgan Chase and Goldman Sachs.

FTSE faltering

Morgan Stanley will still have to develop a strategy for meeting its net-zero commitment, but the banking giant is not alone in needing to address this issue.

New research from sustainability consultancy EcoAct has found that 45% of the UK FTSE 100 have a net-zero commitment in place by no later than 2050. However, only 16% have a dedicated strategy in place to meet the commitment.

Banking firms are amongst the best performing corporates in this area, according to EcoAct, which ranks FTSE 100 organisations based on sustainability reporting performance. The likes of Lloyds, Barclays, NatWest Group and HSBC all appear in the top 20 corporates based on the scoring criteria. Unilever is ranked as the best-performing corporate.

The analysis found that only 35% of FTSE 100 companies currently have science-based targets in place. While three-quarters of FTSE 100 companies are calculating and disclosing their Scope 3 emissions, only 33% have a target to reduce them.

“Over the ten years we have undertaken this research, we’ve continued to see year-on-year improvements to climate-related reported best practice,” EcoAct’s chief executive for Northern Europe Stuart Lemmon said.

“Although we are encouraged to see an uplift in company commitments to Net Zero this year, if we are to succeed in this goal, it is imperative that commitments are backed by sound and achievable strategy.”

Matt Mace