Banks

Banks are financial institutions with a license to receive deposits and make loans. These form liabilities and assets on their balance sheets, respectively. Banks’ capacity to provide finance is affected by liquidity and capital adequacy concerns, including related regulations.

Responding entities tracked


Criteria

Responding Banks Tracked

Institutions by number

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Institutions that are joining the “Paris race,” by making a commitment to any level of action under any of the three dimensions (Targets, Integration, Flows). Depending on which Criteria is selected, this trend shows the number of institutions or the total assets they represent (USD billion).

How many institutions are joining the “Paris race”, by making a commitment to any level of action under any of the three dimensions. Depending on which is selected, this trend shows the number of institutions or the total assets they represent (USD billion).

The number of banks in the UK reporting on Paris responses has increased incrementally over the last five years. Most efforts have been on disclosure of targets, while banks have been slow to incorporate more developed integration measures, despite growing regulatory pressure, and rising green finance contributions have not resulted in alignment across portfolios as a whole.

The 16 banks reporting in 2020, rising from 10 in 2015, represent approximately USD 7 trillion in assets, compared to USD 10 trillion overall among monetary financial institutions in the UK.

Trends By Dimension


Criteria

Targets

Distribution

Institutions by number

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Distribution of integration scores for the selected institution category. Gradations in each bar represent different levels of response (ranging 0-100 from “Initial response” to “Advanced response”). The distribution can be based on the number of institutions or their underlying assets (USD billion).

Distribution of targets scores for the selected institution category. Gradations in each bar represent different levels of response (ranging 0-100 from “Initial response” to “Advanced response”). The distribution can be based on the number of institutions or their underlying assets (USD billion).

Reliability

Target drivers

*based on average nr or AUM of reporting entities in the last 5 years

AVERAGE SCORE

Avg by number of institutions

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The green line indicates the average integration score (0-100 from “Initial response” to “Advanced response”) for the selected institution category. The average across institutions can be calculated as simple average of scores or weighted by the assets of covered entities. The dotted line indicates the score of the single institution emerging as the category’s “early leader.”

The green line indicates the average targets score (0-100 from “Initial response” to “Advanced response”) for the selected institution category. The average across institutions can be calculated as simple average of scores or weighted by the assets of covered entities. The dotted line indicates the score of the single institution emerging as the category’s “early leader.”

Reliability

Target drivers

*based on average nr or AUM of reporting entities in the last 5 years

Although only 10 banks reported targets in the most recent data, these represent almost all banking assets among those reporting. While there has been a stable increase year after year in the number of institutions joining the race, the change in terms of total assets is much smaller, suggesting that large banks moved earlier.

Half of banks, representing two thirds of assets, show a developed response (scoring on average 40-70), and none score below 20. Improvements have been steady since 2015. On average, banks reached a developed response in 2017, with their score converging to close the gap between early leaders and the average. Barclays and Lloyds Bank lead, both at 54.

Trends are driven mainly by increased awareness and adoption of quantified mitigation targets, which a good share of banks started adopting and disclosing since 2015, with several new commitments being made in 2019 and 2020.

Integration

Distribution

Institutions by number

Chart Bar

Distribution of integration scores for the selected institution category. Gradations in each bar represent different levels of response (ranging 0-100 from “Initial response” to “Advanced response”). The distribution can be based on the number of institutions or their underlying assets (USD billion).

Distribution of targets scores for the selected institution category. Gradations in each bar represent different levels of response (ranging 0-100 from “Initial response” to “Advanced response”). The distribution can be based on the number of institutions or their underlying assets (USD billion).

Reliability

Integration drivers

*based on average nr or AUM of reporting entities in the last 5 years

AVERAGE SCORE

Avg by number of institutions

Chart Bar

The green line indicates the average integration score (0-100 from “Initial response” to “Advanced response”) for the selected institution category. The average across institutions can be calculated as simple average of scores or weighted by the assets of covered entities. The dotted line indicates the score of the single institution emerging as the category’s “early leader.”

The green line indicates the average targets score (0-100 from “Initial response” to “Advanced response”) for the selected institution category. The average across institutions can be calculated as simple average of scores or weighted by the assets of covered entities. The dotted line indicates the score of the single institution emerging as the category’s “early leader.”

Reliability

Integration drivers

*based on average nr or AUM of reporting entities in the last 5 years

The number of banks responding on integration is increasing. The 14 banks reporting in 2020 represent almost all total assets across institutions reporting Paris responses.

However, banks are still at initial response stage. In 2020, 80% of banks still score below 30 (or just over two-thirds when weighted by total assets). The average response is still very low (15), and banks only began to go beyond first explorative steps in 2019. Early leaders are not too far from the rest of the pack, with Barclays and Gulf International Bank Ltd at 24.

The main drivers have been climate risks and climate progress reporting, while little action has been taken on more complex steps such as emissions reporting and using climate scenarios in decision-making. Only eight institutions have transparently disclosed their exposure to climate risk.

Flows

INVESTMENT TRENDS

USDm *2019-2020 data is incomplete

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Bars show the volume of transactions in primary low-carbon and climate-resilient investments, and green bond issuances. Figures are always expressed in USD million.

Sources: BNEF, CBI, CPI, NAZCA, RAN

Reliability

Flows drivers

*based on average nr or AUM of reporting entities in the last 5 years

PORTFOLIO ALIGNMENT

Institutions by number

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Distribution of institutions based on the assessment of the share of their investment portfolios exposed to climate-critical sectors as either aligned or misaligned with Paris goals. The distribution can be based on the number of institutions or their underlying assets (USD billion).

Sources: FFD, FinanceMap, TPI

Reliability

Flows drivers

*based on average nr or AUM of reporting entities in the last 5 years

Banks have contributed to green financial flows particularly through issuing green bonds, but their portfolios are still misaligned with Paris goals. Banks’ commitments increased significantly from 2017 to 2018, with primary finance to low-carbon investment doubling from USD 1 billion to USD 2 billion, and green bond financing increasing from 5 to 7 billion in the same period.

Unfortunately, banks are still heavily involved with fossil fuel finance. None of the six banks for which data is available on portfolio alignment are currently on a trajectory compatible with Paris goals.

TRENDS BY INDICATORS


Targets indicators


Awareness of climate change

awareness of climate change

Institutions by number

Chart - How to read

Distribution of institutions that have announced a clear commitment to addressing climate change through their activities, thereby raising awareness for action on climate risks or goals. The distribution can be based on the number of institutions or their underlying assets (USD billion).

Sources: PRI, TPI or activity tracked under other indicators (adoption of mitigation targets, investment and divestment goals, activity to influence actors in the system).

Reliability

Adoption of quantified mitigation targets

Adoption of quantified mitigation targets

Institutions by number

Chart - How to read

Distribution of institutions that have set clear targets for climate action (primarily reducing their emissions), whether those are quantitative targets or general, and whether they are disclosed transparently. The distribution can be based on the number of institutions or their underlying assets (USD billion).

Sources: SBTi, ERI, NAZCA, WMB, TPI, NZAOA, PRB

Reliability

Mitigation targets by type

Institutions by number

Chart - How to read

Distribution of institutions that have set a target, by type of target adopted. The distribution can be based on the number of institutions or their underlying assets (USD billion).

Sources: SBTi, NAZCA

Reliability

Adoption of investment goals

ADOPTION OF INVESTMENT GOALS

Institutions by number

Chart - How to read

Distribution of institutions that have set and disclosed clear, accountable and measurable targets to provide a volume of financial services and investments for climate action. The distribution can be based on the institutions by number or their underlying assets (USD billion).

Sources: WRI

Reliability

AGGREGATE INVESTMENT GOALS

USDm

Chart - How to read

Bars show the cumulative volume of investments that institutions have committed to in goals at the organizational level. Figures are always expressed in USD millions.

Sources: WRI

Reliability

Adoption of divestment goals

Adoption of divestment goals

Institutions by number

Chart - How to read

Distribution of institutions that have announced a clear target to divest from fossil fuels, with a clearly defined scope. The distribution can be based on the number of institutions or their underlying assets (USD billion).

Sources: DivestInvest, FFD

Reliability

Adoption of institutional strategy on climate change

Adoption of institutional strategy on climate change

Institutions by number

Chart - How to read

Distribution of institutions that have set an institution-level strategy to incorporate climate change risks and opportunities, including investment or decarbonization plans. The distribution can be based on the number of institutions or their underlying assets (USD billion).

Sources: PDC, PRI, TPI, CAFI, PRB

Reliability

Influencing actors in the system

Influencing actors in the system

Institutions by number

Chart - How to read

Distribution of institutions that are engaging with government and industry on climate change. The distribution can be based on the number of institutions or their underlying assets (USD billion).

Sources: InfluenceMap, World Economic Forum / Mission Possible, BEI, IA, SAS, PSI, PRI, NZAOA, WMB, TPI

Reliability

Integration indicators


Disclosure of climate risks

Disclosure of climate risks

Institutions by number

Chart - How to read

Distribution of institutions that have committed to the disclosure of climate risks and, if so, whether the level of disclosure has been assessed and can be considered sufficient. The distribution can be based on the number of institutions or their underlying assets (USD billion).

Sources: AODP, PRI, TCFD, CA 100+, WMB

Reliability

Emissions reporting

Emissions reporting

Institutions by number

Chart - How to read

Distribution of institutions that have committed to disclose their emissions, and whether there is evidence that emissions are already been tracked internally. Emissions that are verified or cover the full range of activities (scope 1, 2, and 3) are here considered of higher quality. The distribution can be based on the number of institutions or their underlying assets (USD billion).

Sources: TPI, PCAF, PRI

Reliability

Climate progress reporting

Climate progress reporting

Institutions by number

Chart - How to read

Distribution of institutions that are committing to provide, or providing regular updates on measures implemented, and actions taken.

Distribution can be based alternatively on the number of institutions or their underlying assets (USDbn).

Sources: SSEI, CAFI, PSI, WRI, PRB, NZAOA, WMB, PRI

Reliability

Carbon price

CARBON PRICE

Institutions by number

Chart - How to read

Distribution of institutions that have committed to an internal carbon price to inform their decision making, have already adopted one, or transparently disclosed one to the public. The distribution can be based on the number of institutions or their underlying assets (USD billion).

Sources: CDP, CPLC, TPI, WMB, NAZCA

Reliability

CARBON PRICE RANGE ADOPTED

Institutions by number

Chart - How to read

Distribution of institutions that adopted and disclosed a carbon price, by actual carbon price range. The distribution can be based on the number of institutions or their underlying assets (USD billion), while the carbon price range is expressed in USD/tCO2.

Sources: CDP

Reliability

Climate scenario tools

Climate scenario tools

Institutions by number

Chart - How to read

Distribution of institutions that integrated temperature and climate scenario tools to support decision making, and the level of sophistication of the scenario used. The distribution can be based on the number of institutions or their underlying assets (USD billion).

Sources: PRI, TPI

Reliability

Climate risk due diligence

Climate risk due diligence

Institutions by number

Chart - How to read

Distribution of institutions that have adopted internal climate risk due diligence and related procedures, distinguishing between organizations that so far committed to do so and those that have already put measures in place, and the degree at which they are integrated across the operational and strategic levels of the organization. The distribution can be based on the number of institutions or their underlying assets (USD billion).

Sources: PRI, TPI, CAFI

Reliability

Climate-related accountability

Climate-related accountability

Institutions by number

Chart - How to read

Distribution of institutions that have adopted measures for climate accountability, looking at the extent of accountability and incentives for chief and operations-level staff, and at the existence of dedicated staff responsible for coordinating climate action. The distribution can be based on the number of institutions or their underlying assets (USD billion).

Sources: PRI, TPI, SSEI

Reliability

Shareholder / client engagement

Shareholder / client engagement

Institutions by number

Chart - How to read

Distribution of institutions that have committed to engaging shareholders or clients on climate action, or that are taking the necessary steps by mandating climate reporting requirements or through active ownership. The distribution can be based on the number of institutions or their underlying assets (USD billion).

Sources: PRI, PRB, SSEI, 2Di FM, CA 100+

Reliability

Flows indicators


Investment trends

Investment trends

USDm *2019-2020 data is incomplete

Chart - How to read

Bars show the volume of transactions in primary low-carbon and climate-resilient investments, and green bond issuances. Figures are always expressed in USD million.

Sources: BNEF, CBI, CPI, NAZCA, RAN

Reliability

Portfolio alignment

PORTFOLIO ALIGNMENT

Institutions by number

Chart - How to read

Distribution of institutions based on the assessment of the share of their investment portfolios exposed to climate-critical activities as either aligned or misaligned with Paris goals. The distribution can be based on the number of institutions or their underlying assets (USD billion).

Sources: FFD, FinanceMap, TPI

Reliability

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