In order to build responsible banking, it is essential that entities promote plans with which to advance in their green transition. Knowing the impact of your activity, through metrics such as the carbon footprint, is the first step to reformulate the business based on criteria based on sustainability and to verify, as the measures are applied, their effectiveness in favor of the environment.

Recycle the waste that we dispose of in our daily lives, bet on renewable energy sources, reduce the individual carbon footprint in our daily lives through the use of public transport or the reduction of plastics, etc. Each gesture contributes to ensuring the conservation of the environment, in order to take care of our planet in the present and guarantee that future generations have the necessary natural resources, both for their own survival and that of other living beings.

To achieve these objectives, it is essential that, both personally and collectively, we act to mitigate the devastating effect that climate change is producing, with direct consequences such as global warming, that is, the increase in the planet's temperature due to, mainly, to the emission of greenhouse gases (GHG) produced by human activity.

In recent years, various initiatives have emerged to this end. We can highlight the 2015 Paris Agreement, in which 196 countries, as well as regional administrations and private companies from sectors such as banking -among which is Santander- around the world committed to reducing these emissions to achieve climate neutrality in 2050 and prevent global temperatures from exceeding two degrees Celsius compared to pre-industrial times.

This has been a milestone on the path towards more responsible banking, in which entities, in addition to being interested in reducing their own emissions, seek to promote green financing or sustainable investments among their clients, for example. It is in this context where the carbon footprint enters the scene, a key indicator in the fight against climate change.

What is the carbon footprint?

When we turn on the computer, travel by car, charge the mobile phone or carry out any other activity, whether in a personal or professional context, compounds such as methane (CH4), nitrous oxide (N2O), sulfur hexafluoride are released into the atmosphere. (SF6) or carbon dioxide (CO2). The latter is the most abundant and the one that contributes, to a greater extent, to the increase in the earth's temperature.

The trace of these greenhouse gases is known as a carbon footprint. The objective of this environmental metric, in addition to calculating the amount of direct or indirect emissions produced by humans, is to know the impact that activities have on global warming and take measures to counteract them.

In turn, the carbon footprint is an indicator that is part of a measurement of the global state of the environment and is called the ecological footprint. This also incorporates the water footprint, soil footprint and materials footprint to measure aspects such as the land needed to carry out an activity, as well as the biocapacity of the planet to absorb or assume the waste and pollution generated by it.

How do banks measure their carbon footprint?

Knowing what the carbon footprint is is the first step to develop actions aimed at reducing it. For organizations, including those in the banking sector, there are three general parameters:

• Direct or scope 1 emissions: are the gases emitted directly through combustion in machinery, furnaces, vehicles or boilers, which are under the ownership or control of the entity. Fugitive emissions are also taken into account, that is, those produced by leaks in heating systems, air conditioning or breakdowns.
• Indirect or scope 2 emissions: are the gases emitted mainly through the consumption of energy purchased from a third party and consumed by the entity during the development of its activity.
• Other indirect or scope 3 emissions: these are the gases emitted in activities carried out by third parties and that are related to the entity, but are not part of its property or control, such as the transportation of its professionals or the logistics chain of the inputs it uses, among others.

How does a bank reduce its carbon footprint?

After measuring their footprint, banks can take measures to reduce or compensate it, and thus contribute to reducing the negative effects of climate change. In this sense, Santander's main lines of action, for example, include both offsetting its own emissions and helping its customers in the transition to a green economy. Some of them are:

• Reduce emissions. In 2020, the bank achieved carbon neutrality in its own operations, both for the use of renewable energy sources in its facilities and for the compensation of the rest of the emissions with the support of initiatives and projects of reforestation or wind energy, among others . Another aspect that the bank is taking into account is the elimination of single-use plastics in its offices and corporate buildings, which was achieved in 2021, and the installation of LED lighting.
• Decarbonize the portfolio. Santander has proposed by 2030 to completely eliminate its exposure to thermal coal mining worldwide and to stop providing financial services to customers in the electricity generation sector that have revenues of more than 10% from thermal coal.
• Support the green transition. The bank finances renewable energy initiatives and actively advises new projects that have a positive environmental impact on the planet. In addition, the different geographies have a catalog of green products, based on ESG criteria, (ESG in English, for Environmental, Social and Governance) such as green mortgages, loans aimed at energy efficiency in homes or offices, financing for projects transportation (electric and hybrid cars) or low-carbon agriculture. Among the products with ESG criteria there are also loans for the installation or leasing of solar panels, loans for efficient heating and air conditioning systems, and leasing of electric and hybrid cars, among others. In addition, the bank has the Sustainable Finance Classification System (SFCS).