CPI Net Zero Finance Tracker

How are private finance institutions progressing on their Paris Agreement and Net Zero goals?

We compiled ~1000 institutions’ progress on Targets, their Implementation, and Impact by capturing and harmonising existing data efforts.

The Net Zero Finance Tracker (NZFT) provides the most comprehensive assessment of private finance institutions' progress on aligning their activities with Paris Agreement goals and delivering net zero impact.

The NZFT interactive platform is the first effort to track comprehensive, material progress by major financial institutions globally, from their commitments through to action within the institution and the material impacts this has on the wider economy.

Sets of indicators grouped into three dimensions -Targets, Implementation, Impact- are used to assess the responses of individual entities and for insights at the aggregate level.

Targets Signaling intent to respond

TARGET INDICATORS
- Adoption of a mitigation target
- Adoption of a climate investment target
- Adoption of fossil fuel phase out and exclusion targets
Implementation Measuring whether climate considerations are factored into decision-making processes

IMPLEMENTATION INDICATORS
- Internal accountability frameworks
- Shareholder and client engagement
- Policy engagement
- Climate risk strategy
- Climate risk management
- Disclosure of climate risk
- Disclosure of investment data
- Disclosure of emissions data
Impact Creating real economy impact by supporting investment in climate solutions and reduced investment in fossil fuel assets

IMPACT INDICATORS
- Project-level clean energy financing (direct/indirect)
- Project-level fossil fuel financing (direct/indirect)
- Corporate-level green lending
- Exposure to misaligned assets
- Exposure to fossil fuel
- Portfolio emissions

View previous NZFT publications here.

The NZFT captures, standardizes, and assesses data from 50 sources, including CDP, PRI, FinanceMap/InfluenceMap, and ShareAction, offering the most comprehensive net zero coverage of large financial institutions.

Our analysis coverage
The platform displays progress from 2019 for nearly 1,000 financial institutions, representing about USD 100 trillion of combined owned assets and assets under management (AUM), or one fifth of the global financial system (FSB, 2021). These include:
- 629 financial institutions that were members of Net-Zero Alliances supported by the Glasgow Financial Alliance for Net Zero (GFANZ) as of December 31, 2023, corresponding to USD 88 trillion of assets managed or owned. These Alliance members represent a significant share of the overall global financial system. The NZFT excludes members from NZICI (Net Zero Investment Consultants Initiative) and Net Zero Financial Service Providers Alliance (NZFSPA), as they are not capital allocators. The NZFT also currently excludes members from Venture Climate Alliance (VCA) and Net-Zero Export Credit Agencies Alliance (NZECA).
- 31 former Alliance members, as of December 31, 2022, corresponding to USD 2 trillion in assets managed or owned. These members have been retained to allow for comparison of progress with respect to their Alliance counterparts.
- 281 European pension funds that are not Alliance members, selected from among the top 500 European funds, corresponding to USD 5 trillion of assets managed or owned. Focus on pension funds is prompted by the role that this group has-as asset owners-in influencing the broader financial ecosystem.
Given that Alliance members represent a large share of the NZFT dataset, our findings are skewed toward entities that have voluntarily committed to climate action and may not include industry laggards. Further attention is needed regarding financial institutions that have not made commitments or have not begun reporting on their progress. In 2024-2025, we aim to further expand coverage to include top global entities that are not GFANZ members across key financial institution categories, including asset managers, asset owners, banks, and insurers.Despite our ongoing expansion of NZFT sources-including expanded analysis of data from individual institutions’ progress reports-data gaps persist. As a result, trends indicated by the NZFT may partly reflect improved data over time.
Data sources
- Accounting 4 Sustainability (A4S)
- Asset Impact (AI)
- Banking Environment Initiative (BEI)
- BankTrack
- Bloomberg New Energy Finance (BNEF)
- CDP
- Carbon Pricing Leadership Coalition (CPLC)
- Climate Action 100+ (CA 100+)
- Climate Action in Financial Institutions (CAFI)
- Climate Bond Initiative (CBI)
- Climate Investment Coalition (CIC)
- Climate Policy Initiative (CPI)
- DivestInvest
- Energy & Climate Intelligence Unit (ECIU)
- ESG Book
- fDi Intelligence
- FinanceMap/InfluenceMap (FM)
- Fossil Free Divestment (FFD)
- Fossil Free Funds (FFF)
- Global Climate Action Portal (GCAP)
- Global Coal Project Tracker (GCPT)
- Global Oil and Gas Extraction Tracker (GOGET)
- IJ Global
- International Sustainability Standards Board (ISSB)
- Investing in Climate Chaos (ICC)
- Investor Agenda (IA)
- MSCI
- Net-Zero Asset Managers Initiative (NZAM)
- Net-Zero Asset Owner Alliance (NZAOA)
- Net-Zero Banking Alliance (NZBA)
- Net-Zero Data Public Utility (NZDPU)
- Net-Zero Donut/Observatoire de la finance durable
- Net Zero Insurance Alliance (NZIA)
- Paris Aligned Asset Owners (PAAO)
- Powering Past Coal Alliance (PPCA)
- Principles for Responsible Banking (PRB)
- Principles for Responsible Investment (PRI)
- Principles for Sustainable Insurance (PSI)
- Private Participation in Infrastructure (PPI)
- Race To Zero (RTZ)
- Rainforest Action Network (RAN)
- Science Based Targets (SBTi)
- ShareAction
- Task Force on Climate-Related Financial Disclosure (TCFD)
- United Nations Framework Convention on Climate Change (UNFCCC)
- UN Sustainable Funds Database
- We Mean Business Coalition (WMB)
- WRI’s Green Targets

KEY FINDINGS

Overall, we saw Target-setting increasing among tracked institutions from 2019 to 2023. This also appears to have driven increased Implementation action. However, there is still a significant capital gap. The Impacts of such actions are still far from being realized at scale, with the levels of direct and indirectly-enabled investment in clean energy supply still insufficient for a Paris-aligned world when compared with similar fossil-fuel energy investments, and at odds with the COP28 agreement on transitioning away from fossil fuels. Financial Institutions will be expected to reflect this in their investment strategies.

TARGET

Net Zero Coalition efforts have spurred progress on the adoption and quality of climate mitigation targets, with larger institutions leading the way. Progress has also been made on the adoption of operational targets related to climate investment, though these remain less common.

To ensure that climate commitments are meaningful and achieve real impact, financial entities should disclose both short- and long-term climate mitigation targets. These targets should have specific, measurable implementation goals, cover the full range of financed emissions, and ideally be independently validated. Financial institutions should also focus on translating such targets into operational climate finance goals, including investment in climate solutions and phasing-out of fossil fuels investment.

Almost three-quarters of NZFT-tracked entities -covering more than 95% of assets managed and owned- had set mitigation targets as of 2022-2023, with an increase of 6% in the last year (compared to an increase of 80% from 2021 to 2022). Further, the share of entities that have achieved quality mitigation targets (scored as Partial Response, as shown in Figure 2) has progressed significantly from 28% to 42%. Among financial institutions with a mitigation target, the proportion of entities that reported a portfolio coverage exceeding 90% increased from 5% in 2022 to 11% in 2023. This rise reflects efforts to address all asset types within their portfolios. Financial institutions have typically prioritized addressing the highest-emitting sectors within their portfolios, focusin on areas where clear decarbonization pathways exist. Despite encouraging progress on climate targets -driven by legislation and voluntary initiatives- challenges persist due to limited data availability, comparability, and independent validation on Scope 3 financed emissions (S&P 2023; ECB 2023).

Quantified climate finance targets (marking a “Partial Response”) have grown significantly to at least USD 13 trillion in cumulated commitments, made by 5% of entities tracked, representing 38% of the assets managed or owned in the sample. Possible persisting barriers to climate finance target setting include the lack of available pipelines for investment, as well as an insufficiently supportive policy environment, particularly in relation to EMDE countries.

There was also a slight increase in the adoption of fossil fuel phase-out and exclusion targets. As of 2023, 23% of tracked entities -representing more than two thirds of assets managed or owned by NZFT entities- recorded at least a partial response on this metric, compared to 16% in the previous year. Most of these financial institutions have committed to divestment and partial fossil fuel exclusion, with only 2% found to have set phase-out policies covering all fossil fuels in the data sources analysed, while an additional 3% of entities in our sample reported comprehensive fossil fuel exclusion policies.

IMPLEMENTATION

Progress has been observed in implementing measures to reach targets, mainly driven by disclosure of emissions and climate risk data, climate risk management and strategy, and internal accountability. Larger institutions achieved a higher response level. Most observable relative improvements in 2022-23 were in the disclosure of investment data.

Beyond targets, net-zero-aligned investment strategies require financial institutions to identify climate change leadership and incentive systems within their organizations, engage with key external stakeholders (policymakers, clients, and shareholders), and follow the Taskforce for Climate-related Financial Disclosure (TCFD) guidelines for climate risk strategy and disclosure.

Driven by the TCFD and increasing regulatory pressure, about 27% of entities -representing 80% of owned/managed assets- are on their way to establishing strong (Partial Response) climate risk management, strategy, and disclosure systems.

Greatest progress was seen in the disclosure of investment data, with a jump from 4% to 10% of tracked entities making such disclosures, now representing 48% of assets managed/owned.

Some financial institutions have also progressed in setting up disclosure systems for portfolio/financed emissions, with a slight uptick from 36% to 39% -now covering 78% of assets managed or owned. However, none of the tracked institutions has demonstrated full coverage of financed emissions in their disclosures.

Finally, there is substantial agreement among tracked institutions on the importance of engaging on climate issues with their clients, investee companies, and policymakers. Almost 70% have committed to conducting climate stewardship activities. However, of these, only 14% have engaged policymakers on such topics without also opposing progress on climate legislation.

IMPACT

Financial institutions contributed to the financing of up to 15% of new energy projects in 2023. While NZFT institutions' direct investment in clean energy projects grew at an average rate of 6.3% per year from 2019 to 2023, direct finance to new fossil-fuel plants still slightly outstripped these investments in 2023, reaching USD 33.4 billion in 2023.

What ultimately matters is the impact that financial institutions have on the real economy, be it directly or indirectly enabled. Clean energy investment can reduce emissions, while financing new fossil-fuel power plants can lock them in for decades to come.

We investigated the level of financing directed towards the construction and deployment of new physical assets, such as coal plants and wind farms. This represents a subset of investments, specifically and focusing on financial transactions targeting new projects, as compiled from multiple asset-level datasets. Refinancing or acquisitions of existing projects are thus excluded from the analysis.

While direct investments in clean-energy projects (including renewable energy, energy storage, power grids, and nuclear plants) had an average annual growth rate (AAGR) of 6.3% since 2020, investment in new fossil-fuel capacity also saw a growth of close to 10%, with an acceleration in the last two years. This resulted in clean energy investments investment levels being lightly below financing to new fossil fuel projects in 2023.

While direct investment was mainly supported by banks through project-level debt, capital to companies active in high-emitting sectors indirectly led to the deployment of USD 11.7 billion for fossil fuel projects, mainly via capital managed by asset managers.

Financial institutions also indirectly enable new clean energy and fossil fuel projects as shareholder owners or corporate lenders by providing capital to companies that invest in such assets.

Financial institutions indirectly enabled more than USD 11.7 billion of investment in new fossil fuel projects in 2023, in addition to the USD 33.4 billion directly financed at the project level.

Banks in our sample are by far the biggest providers of direct financing to new clean energy and fossil-fuel projects (95% of overall direct financing observed in both sectors), mainly in the form of commercial debt. Asset managers, however, have a major role to play as they indirectly enabled the vast majority of such financing (53% of clean energy investments and 61% of fossil-fuel financing), mainly by lending money to institutions, corporates and real economy actors that invested in these assets.

Most of the direct and indirect finance to fossil fuel projects went to developed economies (the US, Canada, and Western Europe) mainly to produce gas-fired energy, followed by other fossil-fuel investments in the petrochemical sector, other manufacturing, and other oil- and gas-related activities.

While representing a very small portion of total fossil fuel financing, new coal-fired power plants received a total of USD 436 million in direct finance and USD 219 million in indirect finance from our tracked entities in 2023, with assets in Thailand, Bangladesh, India, Poland, Cambodia, and Pakistan.

Financial institutions in our dataset that had strong targets also had stronger implementation.

In 2023, entities that had shown a “Partial response” to target-setting (horzintal axis in the figure to the right) were up to eight times more likely to also take Implementation action (indicated by a larger share of advanced responses on the vertical axis) than those with lower responses on targets. Conversely, poor implementation correlated with weak or lacking targets.

Setting strong net zero targets provides organizations with clear direction, motivation, and accountability, aiding strategic planning and resource allocation to achieve them. Additionally, ambitious targets provide transparency and guidance to investors, shareholders, media, and the public, necessitating meaningful action to reflect progress on the company’s own stated goals. Financially, climate action has also been found to lead to higher-than-expected returns (Ernst & Young, 2022).

It is still hard to say how Implementation actions are driving changes in the real economy.

Entities in our sample with stronger Targets and Implementation also tended to make higher volumes of direct investment. However, these direct investments were observed across both clean energy and fossil fuel projects, yielding no clear conclusions for climate finance. The same applies to growth rates, increasing for both clean energy and fossil fuel projects despite stronger implementation actions.

As a result - like last year no relationship can be inferred between higher Implementation scores and investment in clean energy and fossil fuel financing, due to the time it inevitably takes for corporate targets and implementation measures to translate into investment decisions. Further, financial institutions adopt various decarbonization strategies involving a range of asset classes and instruments, hence correlation may need to be examined across a broader range of impact indicators.

DATA AND THE NZFT

Despite improved data coverage for several indicators, coordination between data providers could improve efforts to close remaining information gaps.

Third-party open data initiatives, initiatives that standardize and streamline disclosures, and a gradual move from voluntary to mandatory disclosure of emissions and transition planning would significantly improve data availability.

Gathering data for the NZFT has increased our understanding of where data collection efforts have been focused and where key gaps remain. Thanks to our expansion of data sources, we observed significant improvements in the coverage of several indicators. This is most notable regarding mitigation targets, divestment targets, policy engagement, and disclosure of climate risk and investment data. We also saw improved data for portfolio emissions, though this is still only tracked for one-quarter of institutions in our sample, and comparability between sources remains limited.

Efforts aimed at enhancing the availability and standardization of data in machine-readable formats are also crucial. Initiatives like the Net Zero Data Public Utility (NZDPU) play an essential role in improving data accessibility and comparability at the source by enhancing reporting by financial entities. Extensive direct surveys by established organizations like CDP and PRI, and progress reports from coalitions, help to source the bulk of the data required to track commitments and actions implemented by organizations.

Third-party data initiatives that independently track material evidence of actions, responses, and their impacts (e.g., InfluenceMap and ShareAction) or maintain and expand asset-level datasets (e.g., BNEF, Asset Impact, and Global Energy Monitor) are also critical to making information available where reporting incentives are not aligned with financial institutions’ interests, such as on disclosure of policy and shareholder engagement, or on the reporting on fossil fuel investment and emissions.

Significant restrictions may, however, still exist in the use of data for entity-level assessment in the case of commercial datasets, even when heavily processed, leading to reduced transparency. This calls for the need to further scale up open data at the asset level.

Despite improved data coverage for several indicators, coordination between data providers could improve efforts to close remaining information gaps.

How can I use the NZFT to learn more?

The NZFT platform provides data on net zero finance trends at the aggregate and institution level. Users can change graph settings to reveal underlying drivers and examine data by number of institutions or volume of underlying assets.

Aggregate Data

In the “Aggregate Data” section, users can visualize data according to “Target,” “Implementation,” or “Impact”. These dimensions are underpinned by key drivers, which can be accessed by clicking on each individual Indicator located above the graph.

The Target and Implementation graphs provide insights on the distribution of entities across each score, offering a comprehensive view of performance within the “Target” and “Implementation” dimensions. Above each graph, the option to “Change” variables allows users to observe the evolution of the following variables: “Number of institutions,” “AUM,” “Revenue”, and “Total Assets.”

The “Impact” graphs shed light on the trajectory of each respective finance flow variable over time. These provide a dynamic view of how finance variables have evolved.

Additionally, filters can be applied to the visualizations, allowing users to tailor their insights by “Sector,” “Subsector,” “Country,” or “Coalition.” This enables more targeted analysis of climate finance information based on user needs.

Institution Data

The “Institution Data” section gives users access to granular entity-level data, encompassing all dimensions and indicators scores. It includes a list of entities, with the option to filter by “Sector,” “Subsector,” “Country,” or “Coalition,” similar to the “Aggregate Data” section.

Users can select desired entities, or search for them by name, to access entity level pages showing their scores and specific actions. Within each entity page, users can click to view the description of indicators and the observed actions that led to the score of each entity indicator.

Methodology

The “Methodology” section explains how the NZFT data has been amassed, analyzed, and presented. Understanding this is pivotal for gaining insights on the credibility and origins of the presented information.

NOTE: While we make every effort to ensure the accuracy and reliability of the data, and have established processes to continually enhance its quality and coverage, errors or inaccuracies may still occur. The entity-level data and analysis presented in the NZFT are designed to offer comprehensive transparency and granularity in the development of aggregate tracking scores. Therefore, the information provided should be used for informational purposes only and not as investment advice. Users are encouraged to verify the data independently and consult with a professional financial advisor before making any investment decisions.