The Net Zero Finance Tracker is an interactive dashboard that, in its beta version, tracks the private finance response to climate change in the United Kingdom. The dashboard provides two, first-of-their kind, assessments as interactive views: response by institution category (”Institutions”); and response by economic sector (“Real Economy”).
The Net Zero Finance Tracker reveals that, while the financial response to climate change in the UK has picked up speed in recent years, we are falling far short of the level of response needed to align finance flows and portfolios with Paris Agreement goals.
About the data
The information in the Net Zero Finance Tracker draws on nearly 200 publicly available and private datasets. These datasets represent the best information currently available to measure alignment with the Paris Agreement, covering a wide range of actions throughout the financial system, as well as concrete benchmarks for progress towards net zero. The methodology provides full details on the datasets included.
Why the UK for the beta version?
As the host of the November 2021 UN climate change conference (COP26) and the first G7 country to legislate a net zero emissions target, the UK is a strong candidate to measure alignment of finance with net zero goals. The depth of the UK’s financial markets provides rich data on actions across financial institutions and corporations, while the independent, public advisory body, the Committee on Climate Change, provides a high-quality dataset on investment needs for net zero on a sector-by-sector basis.
Who is behind this project?
Climate Policy Initiative (CPI) produced the Net Zero Finance Tracker methodology, analyzed available aggregated data, and built the beta dashboard. An advisory group of individuals and organizations has reviewed the methodology and beta dashboard. CPI has established a member network alongside the development of the Net Zero Finance Tracker to promote use and development the Tracker and to collaborate on associated knowledge sharing. Members currently include:
- 2° Investing Initiative
- Aviva Investors
- Bloomberg New Energy Finance
- European Forest Institute
- German Federal Ministry of the Environment, Nature Conservation and Nuclear Safety
- Government of Austria*
- Green Finance Institute
- Icebreaker One
- Impax Asset Management
- Imperial College London
- Institute for Climate Economics (I4CE)
- International Energy Agency*
- Norwegian Ministry for Climate and Environment
- Oxford University
- SOAS University of London
- Swiss Federal Office for the Environment
- UK Department for Business, Energy and Industrial Strategy
- University College London
- UN Principles for Responsible Investment*
- Willis Towers Watson
- World Bank Group
Work on the UK beta dashboard has been funded by the European Climate Foundation while work on a Global beta dashboard has begun with initial support from the Government of Austria. All responsibility for content rests with CPI and not member or funder organizations.
The Net Zero Finance Tracker aims to expand this beta version by offering:
- A comprehensive global assessment of the private finance response to climate change
- A comprehensive global assessment of the public finance response to climate change
- Additional national-level assessments in key financial markets
- Knowledge and collaboration between key institutions engaged in scaling up the financial response to climate change
The institutions view focuses on sources of finance for the low-carbon transition. It tracks institutions’ efforts to make investments and overall organizational practices consistent with the achievement of the Paris goals.
Each category of institution (asset managers, banks, etc.) is assessed on three dimensions of the response to Paris goals:
A. Targets: signal intent to respond, potentially resulting in future integration decisions and flows. This dimension tracks indicative qualitative commitments and quantitative targets adopted to address climate change, as well as membership in coalitions or initiatives that may influence future capital alignment.
B. Integration: measures how climate considerations are factored into decision-making processes, potentially resulting in future flows. This dimension looks at concrete qualitative changes to policies, governance, and investment approaches.
C. Flows: track finance allocated to climate solutions via investment into productive assets, activities and transactions in capital markets. This dimension relies on the measurement of quantitative changes in stocks and flows of relevant finance (both low and high emissions).
Each dimension is measured based on a range of indicators, which in turn are generated from a large number of datasets. See our methodology for detail on how each dimension is assessed.
There are two levels under which the above information is displayed in the dashboard:
1. Overview. This level enables comparison between institution categories on specific metrics such as 1) the number of institutions joining the Paris race or the total assets they represent, 2) Paris response scores (breakdown and averages) for the Targets dimension, 3) Paris response scores (breakdown and averages) for the Integration dimension, 4) investment trends and portfolio alignment for the Flow dimension.
2. Institution categories, displaying a full range of metrics for each group. This includes the number or total assets of institutions responding to climate change, the evolution, composition, and key drivers (in terms of specific indicators) of scores for Targets and Integration, and investment trends and portfolio alignment measuring Flows.
Average scores for Targets and Integration also reveal the performance of early leaders, defined as individual institutions in each category that score higher than their peers and therefore help to set the bar for what is achievable today.
Real economy view
The real economy view focuses on the use or destination of finance: climate outcomes in major sectors of the real economy. Getting emissions to net zero in as many sectors as possible is now viewed as the prerequisite for achieving Paris goals.
The view tracks historical greenhouse gas emissions (CO2e) and projects a Paris-aligned pathway for each economic sector based on the balanced net zero scenario in the 6th Carbon Budget published by the UK’s Climate Change Committee (CCC). It then tracks investment flows – specifically primary investments into productive assets or activities, since these have effects on climate outcomes in the real economy – and compares those to the level of investment needed in each sector to achieve the emissions reductions required to reach net zero.
As with institutions, there are two levels:
A. Overview: provides the context of reductions in emissions required for the UK to meet its target of net zero by 2050, and the legally enshrined interim target of a 78% reduction by 2035 compared to 1990 levels. Using CCC data, it shows the historical trend in emissions, the stringency of legislated carbon budgets, and a pathway from 2020 to 2050 that achieves net zero.
B. Individual sectors views show the emissions reductions needed in each, and the CCC’s estimates of investment needs to 2050 to achieve those. These are compared to information on historical investments in the same sector, measured by CPI’s dataset from the Global Landscape of Climate Finance. The sectors available in the dashboard for more detailed analysis include:
- Real Estate
- Agriculture, Forestry and Other Land Use
- Waste & Water
See our methodology for greater detail on the definitions of sectors, background assumptions, and issues causing data gaps, such as the limited availability of information on net zero-compatible investments in certain sectors.