Banco de Sabadell S A : Sabadell makes progress with its NZBA commitment by setting new decarbonisation targets in three carbon-intensive sectors

27 December 2023. Banco Sabadell takes another step forward with its commitment to climate action and presents a new report on decarbonisation targets, which includes new targets set in three carbon-intensive sectors, namely, Iron & Steel, Automotive and Aviation, in addition to monitoring the targets set in 2022 for the Electricity, Oil & Gas, Cement and Coal industries, and reporting on the main cross-cutting and sectoral levers applied for its decarbonisation strategy.

By taking this action, the Bank reinforces the transition of its lending portfolio based on the targets set out in the Paris Agreement and continues to promote its partnership with major climate commitments, such as the Net-Zero Banking Alliance (NZBA), part of the United Nations Environment Programme (UNEP FI). This involves setting out decarbonisation pathways to ensure that the carbon footprint of its credit and investment portfolio is reduced, as part of the efforts to limit the global temperature rise since the pre-industrial age to +1.5ºC, with the aim of reaching net zero emissions by 2050.

Decarbonisation strategy

In response to the main challenges of the transition towards a carbon-neutral economy, Banco Sabadell has a decarbonisation strategy which it is embedded into the entire process of its activity. For this reason, it has identified 3 main pillars, namely, strategic action framework, support in the transition and risk management, from which cross-cutting and sectoral levers are activated.

Concerning its strategic action framework, the Bank believes it is important to ensure that its portfolio is aligned with its decarbonisation targets and, to that end, it has introduced elements linked to decarbonisation in its risk appetite framework, in its policies, in its sectoral planning processes, and it has set decarbonisation pathways to achieve those targets.

In its business operations and in its support for customer transition, the Bank is reinforcing actions to raise awareness and offer advice, across all sectors of the business fabric, providing solutions to finance the investments needed for that transition. To that end, it has made all of its capabilities available to them through specialised teams and a Sustainable Financing Framework. To complement this, the Bank supports large corporations by providing financing for their decarbonisation plans and it offers specialist advisory services and financing, with brokered solutions, to SMEs and individuals.

In terms of risk management, the Bank has introduced decarbonisation levers in its risk management guidelines, in the credit approval process and in portfolio monitoring, which can be seen in the analysis of customers' performance in their transition commitments and plans. The Bank also estimates how their operations might potentially impact the achievement of the decarbonisation targets for 2030 and it monitors decarbonisation pathways on an ongoing basis.

Decarbonisation targets

In relation to achieving the targets set in 2022 for the Power, Oil & Gas, Cement and Coal industries, the Bank applies its decarbonisation strategy ensuring that different levers are applied according to the specific features of the sector and clients.

In the words of Elena Carrera, Banco Sabadell's Director of Sustainability & Efficiency: "Banco Sabadell is making progress with its commitment to support its customers with their decarbonisation efforts, setting new 2030 targets for sectors with the greatest climate impact, and it will remain committed to financing the transition of companies that invest to adapt to a low-carbon economy and whose ESG performance is in line with the Bank's expectations in each sector".

To that end, the main levers in the Electricity sector are maintaining its leadership in project finance for renewables energies and promoting the development of new technologies that provide alternatives to fossil fuels. To achieve the Oil & Gas sector targets, the Bank focuses its efforts on helping customers in reducing their emissions by offering financing for investment plans that are linked to, for example, the development of synthetic fuels or the transformation of the production model.

In the Cement sector, the decarbonisation effort mainly focuses on helping customers to reduce their emissions intensity, by encouraging the transformation of their production models. And in the fourth sector, Coal, although this only accounts for a residual portion of the Bank's portfolio, the Bank maintains its firm commitment to phase out exposure in this sector by limiting new lending to companies in the coal industry.

Regarding the new targets that the Bank has set in three new carbon-intensive sectors, namely, Iron & Steel, Automotive and Aviation, the focus is on the stage of each sector's production chain where transition is most likely to reduce the overall volume of greenhouse gas emissions, based on the Science-Based Targets initiative (SBTi) and the pathways marked by the reference scenario (IEA NZE2050).

In addition, in August 2023 the UK subsidiary, TSB, published specific targets for its residential mortgage portfolio.

Carbonisation milestones in Banco Sabadell's Commitment to Sustainability

Banco Sabadell's ESG strategy is part of Sabadell's Commitment to Sustainability, with four strategic pillars (Institution, Customers, Investors and Society), with decarbonisation targets being a key element to support customers during the transition and to achieve emissions neutrality in the Institution's investment and lending portfolios.

For more information on decarbonisation targets, see the report published on the corporate website, in the section entitled Sabadell's Commitment to Sustainability

Send email