Most commentators estimate the global investment to finance the green transition at between $3-5 trillion per annum globally. Closer to home it has been suggested it will cost €40 billion just to fund Ireland’s clean energy transition alone, and a figure of €20 billion per annum has been quoted by the IMF as the investment required to meet Ireland’s transition to a zero-carbon economy by 2030.
CEO of AIB Colin Hunt says banks have a crucial role to play in reducing our carbon emissions. “While the energy crisis has prompted a near-term rethink on oil and gas, Russia’s invasion of Ukraine has made the immense task of financing the medium-term transition from the global economy’s addiction to fossil fuels even more critical given the new imperative to balance green ambitions with energy security.”
AIB has made significant progress over recent years in setting ambitious sustainable finance commitments and developing ESG policies that impact almost every aspect of its operations. Sustainalytics, a global leader in ESG ratings, has recently ranked the bank in the top 5 per cent (44th) of more than 1,000 banks globally.
The bank continues to ramp up delivery on its sustainable finance commitments. “In 2019 we announced our five-year Climate Action Fund, aiming to lend over €1 billion each year for climate action, and in 2021 this was doubled to €10 billion in the same five-year timeframe.” Earlier this year AIB raised €1 billion in the first social bond issuance by an Irish bank, with the proceeds being used to support projects with clear social benefits including new social and affordable housing, access to education and healthcare, and finance for SMEs in disadvantaged areas.
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“Sustainability is a key strategic priority for AIB Group as we seek to help protect our fragile planet from the devastating impact of climate change by reducing our own carbon footprint and helping our customers to do the same,” says Hunt. “We are supporting larger companies, small businesses and personal customers to reduce their carbon emissions with the aim that 70 per cent of our new lending will be green or transition by 2030.”
AIB has also joined a consortium of banks backing the €500 million Greenlink Interconnector linking Ireland and Wales. The project, construction on which began earlier this year, will enable additional renewable energy sources on to the Irish power system, enhance Ireland’s security of supply and reduce energy pricing volatility.
Banks are going green in every way they can, Hunt says, adding that the bank recognises the need to continue to focus on key areas such as home retrofits, transport and other sectors to ensure climate targets are met.
AIB now offers discounted loans to residential developers who adhere to a new Irish Green Building Council (IGBC) benchmark which sets higher green building standards than are required under current building regulations. They also offer Sustainability Linked Loans (SLLs) to eligible corporate customers offering a reduced rate of interest linked to the achievement of ambitious, predetermined sustainability targets.
“In relation to small and medium enterprises (SMEs), we are making €70 million available through the Strategic Banking Corporation of Ireland’s Energy Efficiency Loan Scheme to help eligible SMEs and farmers cut their energy bills and reduce their carbon emissions by investing in energy-saving measures,” Hunt adds.
AIB is also incentivising customers to reduce their carbon emissions by offering discounted green mortgages to customers purchasing energy efficient homes; discounted personal loans for customers seeking to make their homes more energy efficient and promoting the purchase of electric vehicles.
“We are pleased to say that green lending already accounts for 23 per cent of total new lending, putting us on course to reach our green lending ambitions by 2030 as we pledge to do more to support our customers, our country and the wider global community in the transition to a low-carbon future.”
AIB’s sixth annual sustainability conference takes place on 17th October. The conference theme is No Time to Waste. Speakers include actor Cate Blanchett, Global Goodwill Ambassador for UNHCR. The event is free, and those who wish to attend online can register for the event on https://www.aibsustainabilityconference.ie/register/.