A Special Report is content that is edited and produced by the Special Reports unit within The Irish Times Content Studio. It is supported by advertisers who may contribute to the report, but who do not have editorial control.

AIB chief stresses importance of taking action against climate change

Bank aims to achieve net-zero carbon emissions in its operations by 2030

AIB wants green lending to account for 70 per cent of new customer lending by 2030

AIB wants green lending to account for 70 per cent of new customer lending by 2030

 

AIB has set a deadline for achieving net-zero carbon emissions in its own operations by 2030 and wants green lending to account for 70 per cent of new customer lending by the same date. This is part of the bank’s commitment to help the Irish Government and the European Union meet their carbon reduction targets, according to chief executive Colin Hunt.

“Managing climate change is the most important challenge facing this generation and the role of finance in supporting the transition to a low-carbon economy is pivotal,” he says. “When I became chief executive last year, I put sustainability at the heart of AIB’s strategy. We are focused on ensuring AIB is leading the Irish financial market in climate change action by creating a virtuous green circle, where sustainable lending practices attract the capital that supports further lending for the benefit not only of our customers and the wider economy, but also the fragile planet which sustains us all.”

The strategy addresses AIB’s internal activities and its external impact in terms of its lending and other practices. “This is not new to the bank,” Hunt explains. “We have been consistently reducing our carbon footprint for the past six years. Since 2014, we have achieved a 40 per cent reduction in that. AIB is a significant business in its own right with more than 300 locations and 9,500 employees. We have a role to play and we have to be more aware of the impacts we have on society and the environment in which we operate.”

Transition

Additional actions being undertaken include initiatives to reduce water usage, waste and paper. “We aim to transition to renewable energy across the estate and we have removed single-use plastics in head office locations already,” says Hunt. “We will also continue to improve energy efficiency and will reduce the need for business travel in the coming years.”

The strategy extends beyond the bank. “We have also introduced a responsible supplier code for the 4,000 suppliers who enable us to go about our daily work. We are asking them to share our sustainability ambitions and abide by the same principles as we do in their own operations.”

The bank has now gone public with its net zero target. “We are going to report on that on a regular basis,” says Hunt. “That means cutting greenhouse gas emissions to as close to zero as possible and eliminating rather than offsetting them.”

AIB is also a founding signatory of the United Nations Environment Programme Finance Initiative Principles for Responsible Banking.

“All banks have a role to play,” Hunt adds. “Part of that is what we do internally, and another part is to work with customers on their transition to the low carbon future through sustainable finance and lending. This is not only good for the planet but also good for business.

“There is a very significant gap in the amount of capital that needs to be invested in that transition and that presents an opportunity for banks. We set up a unit three years ago to address that opportunity and it is the fastest growing part of the bank, doubling in size 2018 and 2019. It also stood up well during Covid-19. This is good for the planet, good for our customers and good for business.”

AIB is also committed to working with its personal customers. “Our customers have drawn down more than €245 million in green mortgages for energy efficient homes following the launch of the AIB five-year fixed rate green mortgage last November,” he says.

“We estimate that this will result in a reduction of carbon emissions by 137,000 tonnes over the next 30 years. For our customers, it means they get energy efficient homes which are warmer with lower fuel bills at a very attractive mortgage rate.”

The bank also has a zero per cent finance offer on electric vehicles for the Nissan Leaf. “The average customer can save €13,000 on finance and running costs over five years,” Hunt notes. “They can also save 11 tonnes of CO2 emissions. That’s the equivalent of 180,000 trees which would need to be planted to offset those emissions.”

In addition, the bank has raised €1 billion in the first ever green bond issuance by an Irish bank; established a €5 billion climate action fund for lending into the Irish economy, with €1.2 billion lent last year; and launched a €300 million social housing fund to deliver 2,000 sustainable A-rated homes.

Committed

“We have been very active over the past 12 months,” Hunt adds. “We set about raising money on international markets. We worked with international partners and raised €1 billion in green capital for the bank. This was comfortably oversubscribed, and we were very pleased with major vote of confidence by international investors in lending money into Ireland’s transition to a green economy. But we are not resting on our laurels and we are committed to doing more. Last year we committed to €5 billion in green lending in the next five years. I will be surprised and disappointed if we don’t comfortably exceed the five billion over the period.”

It is important to do these things for the right reasons. “This is not a market we are trying to corner,” he explains. “We are trying to force the pace because we recognise its importance for our future. We want to work in partnership with like-minded businesses and other on move to a more sustainable future. We won the Large Green Organisation at the 2020 Green Business Awards and the Outstanding Achievement Award at the Chambers Ireland Sustainable Business Impact Awards 2020, but we are not doing it to win awards. We are doing it because the greatest challenge for our sector and society is climate change and businesses like ours have a special responsibility to take action now. Time is not on our side and all the data is telling us that and we need to accelerate the progress already being made.”