The Intergovernmental Panel on Climate Change (IPCC) has warned, yet again, that if we are to avoid catastrophic weather events, loss of life, biodiversity and infrastructure, then ambitious, accelerated action is required to adapt to climate change.
The investment required to finance the transition to a low carbon economy can be counted in the trillions of dollars globally. In the case of Ireland, the International Monetary Fund estimates the cost will amount to about €20 billion per annum over the next decade, much of which will come from the private sector.
"As Ireland's largest financial services provider with 2.8 million customers, AIB Group is already taking action to support the transition to a low-carbon future by reducing our own carbon footprint and helping our customers to do the same as we aim to play a significant role in helping the Government and European Union meet their carbon reduction targets," says AIB chief executive Colin Hunt.
“Recognising that the window for action to secure a viable future for our planet is rapidly closing, AIB last year doubled our Climate Action fund to €10 billion and accelerated the rollout of products and services that assist our customers in reducing their carbon emissions,” Hunt adds.
On the personal customer side, these include discounted green mortgages across the AIB, Haven and EBS brands, to support customers seeking to buy energy-efficient homes with an energy rating of B3 or above while AIB also offers green personal loans to help customers upgrade their home insulation, install renewable energy systems or purchase electric vehicles.
On the corporate lending side, AIB also offers Sustainability Linked Loans (SLLs) to eligible corporate customers offering a reduced rate of interest linked to the achievement of ambitious, pre-determined sustainability targets.
“One of our goals is to ensure a greener tomorrow by backing those who are building it today,” says Hunt. “For example, we are part of a consortium of banks backing the €500 million Greenlink Interconnector linking Ireland and Wales. The project will enable additional renewable energy sources for the Irish power system, enhance Ireland’s security of supply and reduce energy pricing volatility. The project’s 500mw capacity is sufficient to power around 380,000 homes.”
AIB is also offering discounted loans to residential developers who meet a new Irish Green Building Council benchmark which sets higher green building standards than are required under current regulations – standards relating not only to the energy efficiency of the development, but also to water efficiency, air quality, transport links and community facilities.
“Our ambition is that 70 per cent of new lending will be green or transition by 2030,” he adds. “And we are making great progress towards achieving that goal as green lending has already increased by 37 per cent to €2 billion in 2021. That represents 19 per cent of total new lending making AIB a clear sustainability leader.”
He also points out that the bank’s energy, climate action and infrastructure lending is both the fastest growing and the best performing loan book in AIB, underlining the fact that green banking can also deliver resilient, sustainable returns.
“The more green lending we do, the more green capital we can attract,” Hunt continues. “AIB has in recent years raised €1.75 billion from issuing green bonds. And earlier this year, we raised €1 billion in the first social bond issuance by an Irish company. The proceeds from these bonds are used to lend to projects with clear environmental and social benefits including energy efficient social and affordable housing, healthcare and loans to small and medium enterprises in socio-economically disadvantaged areas.”
Hunt says it is critical that companies are externally evaluated to reassure customers and investors that they are living up to the standards they set themselves. "Last year Sustainalytics, a global leader in Environmental, Social and Governance (ESG) ratings, ranked AIB in the top 10 per cent of more than 1,000 banks globally," he says. "As chief executive of AIB, I am committed to delivering the sustainability agenda. And while I am pleased with our progress to date, I recognise that we have a lot more to do. More to support our customers in the transition to green. More to make sure our actions live up to our words. And more to save our fragile planet."