The world has witnessed increasingly positive action to combat climate change - from school children to central banks, government and businesses. Many have picked up on these developments and shared their desire for urgent change.

But despite popular protest, declarations from business leaders and government plans, global emissions are still rising. The effects of climate change are already tangible. Moreover, the IPCC has recommended that the world community should quickly adopt ambitious transition policies and low carbon business plans to maintain the global temperature rise within the limit of 1.5°C.

Since its inception about 40 years ago, Triodos Bank has strived to finance projects with a positive impact on society and the environment. We have built an extensive track record financing renewable energy projects, from the first wind turbine in 1987 to the offshore wind farms we finance today.

However, climate change developments are accelerating. This has prompted Triodos Bank to review its position on renewable energy and climate change, resulting in the vision paper Towards a low carbon economy we recently published. We call on all stakeholders to act now to address the climate emergency.

We believe the financial sector must take the lead, because they have the capacity and obligation to finance entrepreneurs and institutions committed to tackling major social and ecological issues. According to the 2018 report of the High-level Advisory Group on Sustainable Finance, an investment of EUR 11.2 trillion is required to meet the European 2030 energy policy and targets set in the Paris Agreement. To finance the energy transition the bulk of the finance must come from banks. Not only should they finance the energy transition, banks should also divest fossil assets.

The vision paper also describes Triodos Bank’s contribution to the energy transition. Renewable energy is the bank group’s largest portfolio, with a total exposure of EUR 2.25 billion - 14.5% of the total group’s funds entrusted as per the end of 2018. Triodos Bank’s has been offering project finance for mostly medium-sized renewable energy generation projects, based on proven technologies. This will continue to be important, but Triodos Bank will move from financing renewable energy generation ‘only’ to financing the energy transition, for instance by financing a more decentralised and distributed energy system and more non-mainstream projects.

We also believe we should implement true pricing, which means taking into account the costs stemming from unsustainable production and consumption. A concrete example of true pricing, and in our view a must, is the introduction of a carbon pricing mechanism. Paying for pollution is an important factor in forcing all parties in society to make better choices.

The financial sector does not stand alone in its responsibility to act. Sound government policy is also a very important driver of the energy transition. We call on governments to develop an ambitious and rigorous policy to phase out the fossil industry by raising CO2 pricing and ending (implicit) fossil subsidies. Governments should strengthen regulation on CO2 reduction, leading to energy efficiency in areas like housing and transportation.

We believe we had to publish Towards a low carbon economy now, because we are running out of time. Without strong action from all global stakeholders, the Paris goals will be out of reach, and future generations will be forced to cope with the adverse effects of uncontrolled climate change. That’s why, according to Triodos Bank and many like-minded organisations, we’re now in a state of climate emergency. We call for immediate action from all sectors of society, including the financial industry.

A second reason to write this paper can be found in the transformation of the energy system away from its fossil base. This has really taken off, resulting in maturing businesses and financing. We welcome this development and aim to be a frontrunner in this transformation, through participation in the public debate on necessary steps and programmes, and through our financing decisions. We want to transform our financing business from ‘just’ renewable energy projects to financing the entire energy transition and encourage others to do the same.

We aim to inform, stimulate and encourage our employees, our customers and the communities we are part of in all countries we operate in and the international networks of sustainable colleagues and friends by sharing our insights. Together we have an obligation to make a difference. We invite all our partners to act. We have no time left to lose.