More finance firms acting on climate change, handful reach 'Gold standard’

A growing number of finance companies worldwide are having a positive impact on tackling climate change, in line with scientific targets.

Nine out of 50 companies are making significant inroads in reaching their net-zero goals according to a new report from Imperial College Business School.

 Academic experts have assessed the credibility of institutions’ climate commitments and actions based on evidence-based criteria and principles set by the UN Race to Net-Zero and the International Energy Agency’s net-zero by 2050 scenario. The findings are revealed in a new report designed to set an industry standard for driving sustainable change across the financial services sector.

The study scored financial companies according to whether they had explicit policies on eradicating financing for fossil fuel expansion or investment from their operations, as well as assessing the extent to which they had accomplished their aims. Nine institutions were given a Gold award for their efforts out of the 50 institutions assessed.

The report, Sustainable Finance Report Card: Recognising Ambition Who’s Walking The Net-Zero Path? has been produced by the Centre for Climate Finance & Investment at Imperial College Business School, in partnership with the Carbon Tracker Initiative,. It will be launched at a webinar hosted by Imperial College Business School on 8 February attended by an audience of financial services professionals.

Rewarding Effort

“The landmark Paris Agreement has prompted financial market participants to rethink climate risk and opportunities,” said Dr Iva Koci, a Research Associate for the Centre for Climate Finance & Investment at Imperial College Business School, and one of the report’s lead authors. “Financial institutions increasingly recognise their pivotal role in facilitating the comprehensive transition to a net-zero economy.”

“This report shines a light on banks and investors with credible climate commitments who have decided to walk the talk on their net-zero promises by ending investment in new fossil fuel projects." Catherine Mckenna Chair of the High-Level Expert Group on the Net-Zero Emissions Commitments of Non-State

To identify those institutions that the report’s authors say are walking the net-zero path, the researchers screened both debt and equity investors’ climate commitment and delivery and awarded the top institutions a Gold status reflecting their high scores.

“We see these awards as an assessment of financial institutions’ resilience – and leadership of their management -- at a time of great and growing disruption of the incumbent fossil fuel system,” said Dr Koci.

 Catherine Mckenna, chair of the High-Level Expert Group on the Net-Zero Emissions Commitments of Non-State said: “In late 2022, the United Nations’ Expert Group on Net Zero issued its report, Integrity Matters -- which set out that ‘net-zero is entirely incompatible with continued investment in fossil fuels’, yet the global financial system has largely been slow to respond, and too many financial institutions have set net-zero and climate pledges while continuing to finance the old fossil fuel energy system.

“This report shines a light on banks and investors with credible climate commitments who have decided to walk the talk on their net-zero promises by ending investment in new fossil fuel projects. Each stands as a shining example of how finance can support our ambition to keep global temperature rises to 1.5C”, McKenna continued.

Companies award Gold for net-zero action

The Gold award recipients highlighted in the report are:

• ABP
• Akademiker Pension
• Danske Bank
• Generation IM
• Handelsbanken
• Ircantec
• La Banque Postale
• New York City Retirement Systems (NYCERS, TRS, and BERS)
• Sarasin & Partners

The report provides guidance to financial institutions that are still engaged in fossil fuel-based activities, on how to clean up their own practices, as well as having a wider positive influence upon financial services professionals, investors, regulators and others.

The report was authored by researchers Dr Iva Koci and Jean Sau from the Centre for Climate Finance & Investment at Imperial College Business School and Amy Owens, co-author and Research Associate, Finance & Net Zero Energy Transition at the Carbon Tracker Initiative. The report is available to download from the Imperial College Business School website.

See the press release of this article