As a leader in sustainability for the banking industry, KeyBank was recently recognized by the Carbon Disclosure Project as a company meeting criteria for the S&P Climate Leadership Index. With programs focused on environmental reporting, a largely successful renewable energy portfolio, and programs targeting a “low carbon future,” the company moves forward by supporting transparency throughout the banking industry.
Andrew Watterson is the Head of Sustainability in charge of Green Office Week. Having joined the team in 2014, he uses his sustainability and organizational change expertise to lead the bank in the development and execution of a sustainability strategy that positions the bank for growth. In his role, he works with the Corporate Responsibility team and bank leadership to help KeyBank balance margin and mission and to achieve dependable results.
Why is being named to the Carbon Disclosure Project’s S&P Climate Disclosure Leadership Index important to KeyBank?
Operating ethically and with transparency is important to us and being recognized by the Leadership Index is a validation that we are on the right track.
It is important that we join our group of banking peers who are also listed on the index, so that we can work together as an industry on the challenges.
Over the years, we’ve built a team to investigate and explore how to best respond to the CDP questionnaire and to help determine the true risks and opportunities related to climate change.
How does this align with KeyBank’s long term sustainability goals as well as investor relations?
When I joined KeyBank back in April 2014, we did an impacts and opportunities assessment identifying what really matters to the bank and which CSR and sustainability programs might be best for us to implement.
In addition to the work we’ve done internally, we looked outside the company for standards, tools, and frameworks that we might leverage. The Carbon Disclosure Project (CDP) has the clearest and most targeted approach. We’ve taken the initiative to ask other companies how they are managing their climate change risks and opportunities in such a constrained environment.
Participating in the CDP program is an important part of our strategy and disclosing how we manage these efforts is important to our company and investors. As a service provider with a branch and retail network, we’ve leveraged the framework to review those facilities and our energy efficiency status.
What actions did the team take to increase the bank’s score by more than 19 points from the 2014 findings?
We started by taking a poll to gain an understanding of where and how we could improve our score with year over year progress.
The CDP framework helped us look across the enterprise at specific areas and then gauge that with how our peers were responding. This created a baseline where we could understand where we were ahead and where we needed to work harder. We completed a comparative analysis of other financial institutions in order to better understand our industry’s position.
What challenges do you see when trying to remain in the top 10% of the CDLI participants?
As CDP continues to evolve over the coming years in the areas of qualitative and quantitative responses, it will continue to challenge us and encourage us to grow. As the quality of responses continues to improve, peer pressure is a factor in continuing to report better quality and depth of data.
Remaining on the CDLI will be a tough challenge many companies will face. Years ago, if you had a score of 92 or above you made the CDLI. Only companies with a score of 99 or 100 remain in the index today. The competition continues to get tougher.
Although remaining on the CDLI is a goal we strive to achieve, our bigger goal is to continue to investigate the risks and opportunities driven by climate change and address and report on them with transparency.
What does a “low carbon future,” look like for the banking industry?
Our core business is to lend money to individuals and businesses. We will still lend money and continue to provide financial instruments. The growth may be in creating portfolios and instruments that focus more on positive climate impacts.
For example, we already have a renewable energy portfolio that is targeted at a specific market segment with the focus of distributing renewables as well as efficiencies. Participating in these types of programs and portfolios makes KeyBank aware of the risks and opportunities related to a low carbon future.
Many opportunities abound in the low carbon future. We’re very excited about the opportunity to finance and support our clients in terms of energy efficiency and renewable energy through real estate assets, in addition to providing products and services.
What is the “environmental 10K” and how is KeyBank helping to establish the program?
Public companies file a 10k. As of late, environmental assets and liabilities have become a hot topic. As such, companies are readying themselves to report on this.
CDP can be seen as a form of an environmental 10K, along with other reporting formats like the GRI4 and its key indicators. Participating in these frameworks is enabling the emergence of an environmental and social governance framework similar to the 10K. For us, we’ve begun including this data in our annual report.
Including this information in our annual report is a way for shareholders to recognize that this is a priority for the bank.
How does KeyBank plan to stay engaged with the CDP’s climate change program?
We’ve become an investor member of the CDP. This provides us with additional access beyond being a signatory. Our focus at this time is the climate change program and not the other material areas.
Every year when CDP send the preview for changes, we participate and respond with what we see as the most important elements. As of late, we’ve been encouraging further delineation between industries. For example, our data is vastly different from a mining industry. Providing further clarity on each industry would help with comparing risks, opportunities, and transparency in each industry. We’ve found CDP to be a useful and legitimate way to communicate our sustainability progress.
Companies can learn more about KeyBank by visiting http://www.key.com and at the CDP’s annual global climate change report https://www.cdp.net/en-US/Pages/events/2015/climate/Global-Climate-Change-Release-2015.aspx .