Finance For Zero: Redefining Financial-Sector Action to Achieve Global Climate Goals

The financial system is woefully misaligned with the world’s climate goals. As providers, underwriters, and fiduciaries of trillions of dollars of capital flows annually, financial institutions must play a critical role in decarbonizing the economy and scaling access to clean, affordable energy.

In the absence of strong government leadership, there has been a proliferation of bottom-up models, tools, metrics, methodologies, and initiatives designed to measure and evaluate the climate performance of financial institutions. While the rapid growth of these initiatives demonstrates the financial sector’s engagement, meaningful progress in realigning global finance to support climate goals has been limited. The financial sector’s climate commitments often overstate or misrepresent the extent to which they support meaningful action toward achieving climate goals, often relying on misaligned targets or metrics that further undermine their effectiveness.

There are deep and inherent limitations to bottom-up approaches to achieving decarbonization goals. Some are within the capability of financial institutions to address while many others are beyond their remit. 

CCSI’s report - Finance for Zero: Redefining Financial-Sector Action to Achieve Global Climate Goals - focuses on the things the financial sector can and should do even in the absence of a robust long-term public policy framework. 

The key recommendations for financial institutions and their alliances in the report are as follows: 

• Be clear and unambiguous about their climate commitments, and use robust and relevant targets, metrics, and methodologies that are aligned with their goals. 
• Cease anti-climate-action lobbying, including through industry associations.
• Focus on the real economy, not on portfolio emissions. This means shifting finance towards clean energy to support a six-fold increase, and using financial institutions’ power and influence to decarbonize their financed entities. 
• Strengthen accountability and oversight significantly, to pressure and incentivize the sector and its alliances to continuously improve . 

The report also discusses how financial institutions and their alliances can contribute to improving knowledge, data, and pathways that underpin their climate strategies and engagement.

Some of the recommendations in this report are bold relative to existing practice, which underscores the gap between existing approaches and the financing pathways that are needed to achieve climate goals. 

​​We hope this report provokes and supports critical discussions among policy makers, financial institutions, and their stakeholders around the policy framework and appropriate set of practices and tools that are necessary to meaningfully orient financial institutions toward our global climate goals.

We are grateful to Environmental Defense Fund for grant support to conduct this research.