Assessing and disclosing climate-related risks and opportunities
Sustainability matters to us, and we consider it a key lever for our future business strategies and an essential component of our bank's success. For this reason since November 2019, we have supported the recommendations of the TCFD, created by the Financial Stability Board (FSB), which aims to develop voluntary, consistent climate-related financial risk disclosures for companies to use in providing information to stakeholders.
The recommendations are built on four pillars: Governance, Strategy, Risk Management, and Metrics and Targets. Furthermore, one of the key recommendations focuses on the resilience of an organisation's strategy, taking into consideration different climate-related scenarios, including a 2° Celsius or lower scenario.
UniCredit has worked with CDP since its inception, as one of the investors requiring companies to respond to the CDP questionnaire on climate change. UniCredit is also one of the respondent companies. Through the climate change questionnaire, CDP requests information on climate risks and low carbon opportunities from the world's largest companies on behalf of 529 institutional investor signatories with a combined US$108 trillion in assets and 147 major purchasers with over US$4 trillion in procurement spend.
This makes CDP climate change the largest and most complete data set on climate risk and low carbon opportunities. We play our role both by contributing data and engaging with companies, as we believe that quality data is a key element to build a low carbon and climate resilient future. The TCFD recommendations have been developed on top of existing disclosure frameworks like CDP and, as soon as they were published by the Financial Stability Board, the CDP harmonised its questionnaire in order to fully integrate the recommendations. As of 2020 a dedicated section for financial services has been prepared which makes the questionnaire more usable and sector-specific for a continuously improved disclosure.
Support the transition to a low carbon economy
We continue to invest in renewable energy sources and in 2020 our exposure to this sector was €6.1 bilion.
In our strategic plan, we have committed to increasing our exposure to the renewable energy sector by 25% by 2023 (to greater than €9 billion).
UniCredit has committed to fully exiting thermal coal mining projects by 2023. Our updated Coal Sector Policy prohibits lending to new projects in thermal coal mining and coal fired power generation. We have also set strong commitments in terms of reducing reliance on coal for corporate finance customers.
We developed a new Oil and Gas (O&G) policy which covers the Arctic area, prohibiting the financing of new projects in Arctic oil and offshore Arctic gas. It also prohibits shale oil and gas and related fracking, tar sands oil, and deep-sea mining O&G. Corporate financing for clients active in these areas will only be allowed if their share of revenues from non-supported activities is under 25%.
We will not support companies involved in the deforestation of rainforests. We aim to ensure that our activity does not favour deforestation or forest degradation, unless properly mitigated.
UniCredit has been active in sustainable finance since 2007 and is currently among the Top 10 banks in ESG-linked loans. We aim to achieve Top 5 league table position in EMEA combined Green Bonds and ESG-linked loans through the support of the Sustainable Finance Advisory Team.