Banorte head pushes for climate change to be priority in lending

Speaking in advance of COP26, Banorte chairman Carlos Hank González said Mexican banks should give lending priority to companies that have proven sustainability programs to combat climate change.

“Banks should promote financing to those companies that are part of the low carbon economy," Hank told the International Chamber of Commerce’s (ICC) global leaders for climate change virtual forum.

With a loan book of 794bn pesos (US$39.3bn) as of August, according to bank regulator CNBV, Banorte is the second largest commercial lender in Mexico and is the only domestically owned bank to remain a major player in the country. 

Hank (pictured) was the only representative on the panel, staged by the ICC with the purpose of setting private sector priorities for climate action during discussions at COP26, which starts Sunday in Glasgow, Scotland, running to November 12.

“Financial institutions must identify the sectors and sub-industries whose operations, products and services, as well as their supply chains, are not aligned with sustainable development," he said. "Banks also should consider improving their environmental performance through green lending initiatives that lend more to firms that are part of the low carbon economy."

ENERGY IRONY

Hank’s comments come as Mexican lawmakers weigh up a package of constitutional reforms to the electric power sector that environmental and private renewables groups say would savagely curtail progress on climate transition and threaten Mexico’s commitments to sustainability goals under the Paris Accord.

The lower house began on Tuesday a series of hearings and discussions on the initiative introduced September 30 by President Andrés Manuel López Obrador.

The reforms would cancel private generation and sales contracts as well as permits, which could be renegotiated with state power company CFE as gatekeeper and setter of terms. Energy regulator CRE and grid operator Cenace would also lose their autonomy if the current bill passes.

It would also rewrite the country's clean-energy licensing (CEL) framework to allow CFE to continue meeting renewable energy goals via hydroelectric and nuclear power, which are more in line with the utility's current investments and plans to ramp up hydrocarbon-based generation.

GLOBAL EFFORTS

“Climate change is a serious threat to humanity. The only solution is collective action,” said Hank. “The time for debate is over; the fight against climate change cannot wait.” 

The meeting was attended by representatives of companies such as BP, IKEA, Nestlé and P&G. Banorte participates in the Net Zero Banking Alliance and in the Principles of Responsible Banking as a founding signatory. 

It has also joined the Taskforce on Nature-related Financial Disclosures, an initiative to help the financial sector and other industries carefully assess nature-related risks and opportunities.