The report analyses the world’s 30 largest listed financial institutions, finding a significant lack of meaningful short-term action to address the climate crisis, despite the institutions’ commitment to halving financed emissions by 2030 via the Glasgow Financial Alliance for Net Zero and the Race to Zero campaign.

Although 29 of the 30 assessed financial groups have set 2050 climate goals as part of the Glasgow Financial Alliance for Net Zero (GFANZ) initiative, all 30 remain members of financial industry associations opposing emerging sustainable finance policy.

The financial sector has seen increased support for climate action, with a flurry of climate announcements, targets, and reporting released by the world’s largest financial institutions. However, there is a significant disconnect between statements and actions, and climate-related reporting contains significant gaps across the board as measured against TCFD.

All major financial groups retain memberships in industry associations opposing evolving climate finance policies in the EU, UK, and US, and their banking and asset management arms remain highly active in fossil fuel production financing, in direct contrast to science-based guidance.

Financial institutions continued and considerable financing of the fossil fuel value chain in the amount of at least $740 billion facilitated primary financing in 2020 and 2021 is another facet of the lack of short-term action. The report recommends that institutions take immediate action toward Paris alignment by auditing their association memberships to ensure alignment with their top-level climate commitments.

Asset managers’ holdings are often misaligned with the markets in which they are invested, and large portions of climate-relevant portfolios continue to consist of holdings in companies that are not transitioning in alignment with the IEA Net Zero pathway. The report recommends establishing clear investment expectations for investee companies, backed up by impactful voting and escalation strategies.

Only 11 of the 30 financial institutions have set short-term targets across multiple sectors, and many appear unengaged on sustainable finance policy, keeping largely to high-level statements in their communications with limited examples of direct engagement on government policy streams. The report suggests that financial institutions can take action towards Paris alignment by aligning their direct and indirect policy engagements with their net-zero commitments.