The Bank of Cyprus is spearheading sustainability efforts, aiming to achieve net-zero emissions by 2050 and reduce GHG emissions by 42% by 2030 through energy efficiency measures and green financing products. Through strategic lending, ESG due diligence, and risk management, the bank is actively contributing to Cyprus’s economic transformation towards a greener, more resilient future.
What steps is the Bank of Cyprus taking to address climate change and promote sustainability?
The Bank of Cyprus is advancing sustainability by:
- Targeting net-zero emissions by 2050, with a 42% GHG emissions reduction by 2030 from 2021 levels.
- Implementing energy efficiency initiatives like boiler upgrades and solar panel installations.
- Introducing the “Green Housing” loan product aligned with Green Loans Principles.
- Assessing and reducing the carbon footprint of its loan portfolio.
- Engaging in strategic lending and client education for high-risk sectors.
- Conducting ESG Due Diligence and risk management for climate risk mitigation.
Leading the Charge in Environmental Responsibility
The Bank of Cyprus (BOC) has firmly positioned itself as a vanguard of sustainable practices, particularly in its proactive approach to combating climate change. Acknowledging the monumental challenge posed by a changing climate, the bank has taken considerable steps to ensure its operations are environmentally conscious and sustainable. The adverse effects of climate change are becoming increasingly evident, with extreme weather phenomena like snowstorms and wildfires becoming more frequent in Europe. In response, BOC is determined to sustain its leadership in the Environmental, Social, and Governance (ESG) realms.
Recognizing 2023 as one of the warmest years on record, according to the World Meteorological Organisation, the Bank of Cyprus is aligning its strategy with the ambitious target set by the European Union – achieving net-zero emissions by 2050, with crucial intermediate goals slated for 2030. The urgency to reduce global greenhouse gas (GHG) emissions by 45% before the next decade is clear, aiming to limit the global temperature rise to 1.5°C as outlined in the Paris Agreement. As a financial institution, BOC understands the substantial financial mobilization needed to transition to a low-carbon economy, a movement filled with both potential risks and opportunities for businesses.
Strategic ESG Commitments and Achievements
In its quest for carbon neutrality by 2030, BOC has laid out a comprehensive ESG strategy. The strategy specifies a 42% reduction in Scope 1 and Scope 2 GHG emissions from its 2021 baseline, which are categories that encompass direct emissions from fuel combustion and indirect emissions from purchased electricity. The bank has already made significant headway, achieving an 18% emission reduction in these categories through initiatives like energy efficiency improvements, including boiler replacements and solar panel installations. By 2025, further investments in energy-efficient technologies and shifts away from fuel-intensive machinery and vehicles are expected to bring additional decreases in GHG emissions.
BoC’s commitment extends beyond its immediate operations, targeting a broader influence on Cyprus’s economic transition to sustainability. By 2050, the bank aims to reduce all GHG emissions and has begun by assessing its loan and investment portfolio’s carbon footprint. In 2023, BOC set a reduction target for its Mortgage portfolio, aiming for a 43% reduction in GHG emissions per square meter financed by 2030. This initiative aligns with the International Energy Agency’s Below 2 Degree Scenario, minimizing transition risks associated with the shift to a green economy.
Innovative Financial Products and Sector Engagement
The innovation in financial products is evident with the introduction of the “Green Housing” product in 2023. Aligned with the Green Loans Principles of the Loan Market Association, this product is a strategic component of the Mortgage portfolio’s decarbonization strategy. Furthermore, BOC is exploring additional decarbonization targets for various asset classes and sectors within its loan and investment portfolio, indicating a clear path toward achieving its Net Zero goal.
High-risk sectors with unsustainable models in a low-carbon future are subject to the bank’s strategic lending limits. BoC is proactively engaging with its clients, providing education on environmental challenges, and facilitating their transition through green financing options. The bank has also set Green/Transition lending targets for 2024, to support Cyprus’s shift to a greener economy while managing sector-specific transition risks.
Risk Management and Physical Climate Risk Mitigation
The bank acknowledges the inherent physical risks posed by environmental changes, such as increased incidents of wildfires, floods, and earthquakes. Using geolocation data on its collaterals and properties, BOC has successfully identified these risks, enabling the development of targeted risk mitigation strategies. Moreover, in 2023, the bank introduced an ESG Due Diligence process, evaluating both new and existing customers on ESG and climate risk performance, with plans to join a common platform for assessing customer ESG factors across the Cyprus Banking industry.
Intricately woven into the bank’s operations is its commitment to maintaining sustainable practices and leading Cyprus towards a resilient, low-carbon future. Through innovative financial products, strategic risk management, and a steadfast dedication to its ESG goals, the Bank of Cyprus is setting a benchmark for the banking industry’s role in addressing climate change.
How is the Bank of Cyprus addressing climate change and promoting sustainability?
The Bank of Cyprus is actively combating climate change and promoting sustainability through various initiatives such as targeting net-zero emissions by 2050, implementing energy efficiency measures, offering green financing products like the “Green Housing” loan, assessing and reducing the carbon footprint of its loan portfolio, engaging in strategic lending, conducting ESG Due Diligence, and managing climate risks.
What are the Bank of Cyprus’s goals in terms of reducing greenhouse gas emissions?
The Bank of Cyprus aims to achieve a 42% reduction in GHG emissions by 2030 from 2021 levels, with a long-term goal of reaching net-zero emissions by 2050. The bank is focusing on reducing emissions from both its direct operations (Scope 1) and indirect operations (Scope 2), implementing energy-efficient technologies and transitioning to a low-carbon economy.
How is the Bank of Cyprus contributing to Cyprus’s economic transformation towards sustainability?
The Bank of Cyprus is contributing to Cyprus’s economic transformation towards sustainability by aligning its operations with the European Union’s target of achieving net-zero emissions by 2050. The bank is actively engaging in decarbonizing its loan and investment portfolio, offering green financing options, setting sector-specific lending limits for high-risk industries, and educating clients on environmental challenges.
How is the Bank of Cyprus managing physical climate risks and incorporating ESG factors into its operations?
The Bank of Cyprus is managing physical climate risks by using geolocation data to identify risks related to wildfires, floods, and earthquakes. The bank has also implemented an ESG Due Diligence process to evaluate customers on their ESG and climate risk performance. Additionally, the bank plans to join a common platform for assessing customer ESG factors across the Cyprus Banking industry to further integrate sustainability principles into its operations.
