According to Bloomberg, the UK-based financial institution noted that the lack of renewable energy options in crucial markets across Africa and the Middle East is a major hurdle to its ambitious sustainability goals.
In its annual report released on Friday, the bank mentioned “market constraints” in countries like Bahrain, Botswana, Ghana, Iraq, and Tanzania.
These countries don’t have enough access to clean energy sources, which makes it tougher for the bank to switch its power supply to renewables as planned.
StanChart initially made this commitment in 2022 as part of its wider environmental, social, and governance (ESG) strategy, aiming to significantly reduce its carbon footprint.
Even with these obstacles, the bank is still committed to its sustainability initiatives.
Current Progress on Renewable Energy Usage
Despite the challenges, Standard Chartered reported that it has successfully boosted its renewable energy usage for electricity to 77% in 2024 through power purchase agreements, clean energy contracts, on-site solar setups, and renewable energy certificates.
This effort led to a 34% drop in its Scope 2 emissions, which come from electricity consumption.
The bank recognizes that achieving its full transition goal by 2025 is quite a challenge. To lessen the impact, it’s relying on carbon offset strategies, buying carbon credits to balance out emissions from its operations.
Long-Term Net Zero Goals
StanChart has set an ambitious target to reach net zero for its Scope 1 (direct operational emissions) and Scope 2 emissions by 2025. The bank estimates it will produce around 23,000 tons of CO2 equivalent in 2023, highlighting its continued dependence on carbon credits to manage its environmental impact.
For Scope 3 emissions—those linked to its lending and investment activities—the bank aims for net zero by 2050. It has also established interim targets for 12 high-emission sectors, including oil and gas, to be achieved by 2030. Moreover, it has started reporting emissions from its agriculture-related clients, which is a move towards greater transparency regarding its financed emissions.
Wider Industry Hurdles
StanChart isn’t the only one facing difficulties in reaching ambitious climate targets. Just this week, HSBC Holdings Plc revealed a two-decade delay in meeting some of its key sustainability goals. Both banks point to the broader economic situation, explaining that aligning their portfolios with the Paris Agreement’s 1.5°C target is becoming increasingly tough as global warming trends surpass expectations.
A recent report from the climate nonprofit CDP highlighted this issue, showing that banks’ Scope 3 emissions—arising from their loan books and investment portfolios—are, on average, over 700 times greater than their direct operational emissions.