CPI’s Net Zero Finance Tracker covers 562 private finance institutions (FIs) that are members of the Glasgow Financial Alliance for Net Zero (GFANZ), whose assets under management exceed USD 80 trillion. Building on a beta tracker covering UK institutions released in 2021, the latest iteration monitors a wide range of actions that signal progress on financial alignment with the Paris Agreement and net zero emissions goals.
The NZFT is a collaborative and interactive data platform that aims to provide a comprehensive assessment of how private financial institutions (FIs) are progressing on their climate commitments and delivering impact on the ground.
This marks the first effort to track comprehensive, material progress by major FIs globally: from their commitments, through action within the institution, to impacts on the wider economy.
How are FIs progressing on their Paris Agreement and net zero goals?
Since the Paris Agreement in 2015, many initiatives have been launched to galvanize climate action. However, there is currently no comprehensive view of progress across the financial system and real economy. This is essential to understand the transitions underway, the outstanding gaps, and to identify who needs to play which role going forward.
The NZFT can be used to better inform decision-makers in FIs, industry associations, government, and civil society to set the direction for and spur future net zero action.
Key findings from the NZFT dashboard
Our analysis yields important insights on how FIs are progressing on targets, implementation, and impact:
- TARGETS: Most FIs are just starting to adopt broad net zero mitigation targets. Targets related to investment in climate solutions and divestment from fossil fuels are far less common.
- IMPLEMENTATION: Almost all GFANZ institutions have committed to climate stewardship, but less than 25% have engaged in activities that encourage net zero transition, without also opposing it.
- IMPACT: Although clean energy investments now outstrip fossil fuels, progress is faltering and falls far short of what is needed to achieve 2030 Paris Agreement goals
While our analysis finds that setting targets drives implementation among FIs, these have not yet proved sufficient to drive net zero investment in the real economy. To spur change, a multi-faceted approach is needed, including implementing stringent prudential regulations, providing incentives for sustainable practices, and fostering greater public and corporate awareness of the environmental and social impacts of investments.
Coordination between data providers is critical to ensure that data efforts focus on closing information gaps. We also need metrics that can improve accountability of the financial system on the real economy, by looking at indirect investment from shareholders and corporate lenders.
ABOUT THE NET ZERO FINANCE TRACKER
CPI produced the methodology, analyzed available aggregated data, and developed the Net Zero Finance Tracker. An advisory group of experts reviewed the methodology, analysis, and beta NZFT.
It includes an interactive global dashboard, additional national dashboards, and will maintain an active network of members and data providers.