Net Zero Finance Tracker

The indicator describes whether institutions have set clear and comprehensive targets for climate action (primarily reducing their emissions), whether those are quantitative targets, and whether they are disclosed transparently. A clear, measurable, and ambitious target is also an essential component of the transition plan. The full response under this indicator is aligned with frameworks such as TCFD, SBTi, UNEP FI Guidelines for Climate Target Setting, GFANZ Financial Institution Net-zero Transition Plans, UN HLEG Recommendation, ACT Finance, TPT Disclosure Framework.

Data Sources: Accounting for Sustainability, BankTrack, CDP, CPI, ECIU, ESG Book, NZAM, NZBA, NZIA, NZAOA, Net-Zero Donut, Observatoire de la Finance Durable, PAAO, PRB, PRI (2021), RTZ, SBTi

The indicator describes whether institutions have set and disclosed clear, accountable, and measurable targets to provide a volume of financial services and investments for climate action. Financing the climate solution is a critical part of financial institutions' transition plan and strategies. Full response under this indicator is in line with frameworks such as SBTi, AC Finance, NZAOA Target Setting Protocol, as well as GFANZ's climate solutions financing strategies for Transition Plans. TCFD's capital deployment metrics also feature as progress indicators for climate-related opportunities.

Data sources: CDP, CIC, CPI, Net-Zero Donut, NZAOA, WRI Green Targets

The indicator assesses institutions' policies with respect to fossil fuels. Three levels of goals are here considered (in order of decreasing importance):

1. Fossil fuel phase-out policies, referring to financing or enabling the early retirement of high-emitting physical assets.
   
2. Exclusion policies prohibiting new/additional investment in portfolios that do not have mitigation plans or whose activities involve expansion of high-emitting sources.
   
3. Divestment goals from target divestment from fossil fuels.
   Exclusion and phase-out policies are part of ACT framework's engagement targets, and GFANZ's managed phase-out financing strategies for Transition Plans, and HLEG Recommendation. Divestment approaches are hereby only considered as secondary strategies for decarbonization.
   

Data sources: BankTrack, CDP, CPI, DivestInvest, Fossil Free Divestment, Net Zero Donut, NZAM, NZAOA, Powering Past Coal Alliance

The indicator measures to what extent accountability and incentives exist for chief and operations-level staff, as well as whether dedicated climate change responsible person(s) exist in the organization to coordinate climate action. GFANZ Transition Plan has Governance covering roles, responsibility, and remuneration as one of the themes in financial institutions' transition plan. Full response under this indicator is aligned with frameworks such as TCFD's best practice recommendations from European Central Bank, GFANZ Financial Institution Net-zero Transition Plans, NZIF 2.0, ACT 4 Finance - Assessing Low-carbon Transition.

Data Sources: CDP, CPI, ESG Book, FinanceMap, Net-Zero Donut, PRB, PRI

Ownership of shares or debt obligations comes with a certain amount of alleged control or at least with a platform which can be used to convince or help management to decarbonise. The indicator measures whether the organization commits to engaging shareholders or clients on climate action and whether there is evidence of the organization taking the necessary steps by mandating climate reporting requirements or through active ownership on portfolio companies. Positive engagement activities are measured by evidence of shareholder authority and voting rights, proven impact or engagement on business practices and models, with no evidence of negative actions that oppose the transition. Engagement strategy with stakeholders in support of the net-zero objectives contribute to an effective transitioning plan. Full response under this indicator is aligned with frameworks including GFANZ Financial Institution Net-zero Transition Plans, UN HLEG Recommendation, ACT Finance, NZAM, PRI Stewardship for Sustainability, TPT, NZIF 2.0, and TCFD.

Data Sources: CDP, Climate Action 100+, CPI, FinanceMap, Net Zero Donut, NZAM, NZAOA, NZIA, PAII, PRB, PRI, PSI, ShareAction

The indicator describes the commitment to and level of engagement (or lobbying) with government and industry representatives on climate change in a way that encourages, and does not oppose, the transition. This requires regulators and supervisors to approve laws and policies that help align profitability with climate goals and remove barriers to climate-friendly investment. Positive engagement activities are measured by evidence of engagement with governments or regulators on government reforms, on the adoption of standards and taxonomies, incorporation of climate in investor duties, with no evidence of negative actions that oppose the transition. GFANZ has engagement strategies with industry, government, and public sector as one of the themes in financial institutions' transition plan. Full response under this indicator is aligned with frameworks such as ACT Finance, UN HLEG Recommendation, GFANZ Financial Institution Net-zero Transition Plans, TPT, NZIF 2.0

Data Sources: BEI, CDP, CPI, FinanceMap, IA, Net Zero Donut, NZAM, NZAOA, NZIA, PAII, PRI, PSI, WMB

The indicator is based on pillar two of TCFD's framework, about the assessment of the actual and potential impacts of climate-related risks and opportunities on the organization's businesses, strategy, and financial planning where such information is material. The net-zero transition planning will be informed by financial institutions' efforts to identify climate-related risks and opportunities. The full response of this indicator is aligned with frameworks and literature such as TCFD, GFANZ Financial Institution Net-zero Transition Plans, UN HLEG Recommendation, ISSB, NZIF 2.0, WEF, S&P Global Corporate Sustainability Assessment

Data Sources: CAFI, CDP, CPI, FinanceMap, PRI, TCFD

The indicator is based on pillar three of TCFD's framework, about the disclosure of how the organization identifies, assesses, and manages climate-related risks, in short: the organization's internal climate risk due diligence and related procedures. In terms of the relationship between risk and transition planning, risk management practices will help financial institutions identify the need for transition plans and help achieve net-zero goals. The full response under this indicator is aligned with frameworks such as ACT Finance, GFANZ Financial Institution Net-zero Transition Plans, PRI, TCFD, ISSB

Data Sources: CAFI, CDP, CPI, CPLC, GCAP, ESG Book, FinanceMap, Net Zero Donut, PRI, TCFD, WMB

The indicator describes whether an organization has committed to the disclosure of climate risks and whether it started disclosures. The main reference for climate risk disclosures is TCFD reporting, which will be replaced by the ISSB framework starting from January 1, 2024. The full response under this indicator is aligned with frameworks and literature such as TCFD, Bloomberg Law's analysis on ESG tools, PRI analysis, NZIF 2.0, UN HLEG Recommendation, ISSB

Data Sources: Accounting for Sustainability, CDP, Climate Action 100+, CPI, IFRS Sustainability Alliance, NZAM, NZIA, PAAO, PAII, PRI, TCFD

The indicator assesses whether the organization has set up, or plans to set up, internal procedures that allow for the harmonized disclosure of investment in new green projects or high-emissions activities. The transparency of the information regarding actors' progress (such as investment data) toward net zero is critical to track if they are meeting their net-zero commitments in transition plans. The full response under this indicator is aligned with frameworks such as CDP, GFANZ Financial Institution Net-zero Transition Plans, UN HLEG Recommendation, ISSB, TCFD

Data Sources: CAFI, CDP, CIC, CPI, Net Zero Donut, WRI

Commitment to and disclosure of emissions, and breadth of disclosure. The indicator measures whether the organization is committing to disclose its emissions, and whether there is evidence that emissions are already being tracked by the organization. Tracking of emissions that covers the full range of activities (scope 1, 2, and 3) is rated higher. The transparency of the information regarding actors' progress (such as emissions data) toward net zero is critical to track if they are meeting their net-zero commitments in transition plans. The full response under this indicator is aligned with frameworks such as CDP, UN HLEG Recommendation, PCAF, GRI-G4 Financial Sector Disclosure, GFANZ Financial Institution Net-zero Transition Plans, NZIF 2.0, ISSB

Data Sources: CAFI, CDP, CPI, ESG Book, FinanceMap, Net Zero Donut, NZBA, NZAOA, PCAF, PRI, WRI

This indicator measures how entities have directly contributed to funding new clean energy and fossil fuel projects via direct/primary investment. The final project-level data is also used to calculate project-level investment that has been indirectly enabled by financial entities. Climate solutions are based on CPI's Global Landscape of Climate Finance taxonomies of low-carbon activities for the power sector. Fossil fuel financing focusses on funding to new fossil fuel capacity, but may occasionally include infrastructure with unspecified purpose that constitutes transition finance.

Data Sources (last accessed in March 2024): BNEF, GCPFT, GOGET, fDi, IJ Global, PPI

The indicator tracks lending instruments made available to green projects, namely loans and bonds made available for green projects as defined according to Green Loan Principles and Green Bond Principles (in USDm). Examples of eligible projects that have been financed through green bonds include renewable energy projects, such as wind and solar power, energy-efficient buildings, sustainable water management, and clean transportation.

Data Sources: BNEF, CBI

The indicator measures whether entities' portfolio's composition is misaligned with respect to Paris agreement mitigation targets. Misaligned assets are reported both as a share of total portfolio value, as well as a share of assets examined in depth (e.g. assets in traditionally emission intensive sectors).

Data Sources: InfluenceMap

EXAMINED PORTFOLIO (USDm)

Data Not Available

The indicator measures entities' material exposure to fossil fuel investments. Exposure is examined for a subset of the institution's portfolio for which information exists on exposure to companies of which the primary sector of operations is in, or uniquely associated with, upstream or midstream oil and gas and coal mining sectors. Activities included in the portfolio assessed include a variety of asset types, depending on data available, such as lending to, investing in, and insuring coal and oil & gas.

Data Sources: CDP, Fossil Free Divestment, Fossil Free Funds, InfluenceMap, Investing in Climate Chaos, Net-Zero Donut, UN Sustainable Funds Database

EXAMINED PORTFOLIO (USDm)

Data Not Available

The indicator measures the level of financed emissions (tCO2) of financial institutions. Specifically, we track information on Scope 3 - Category 15 (Investments) emissions, portfolio emissions, or financed emissions. Emissions can be either:

• 'Reported' by financial institutions
• 'Estimated' based on asset ownership of the financial institution considered
• 'Interpolated', whereby in the absence of comparable emissions between various years within the same institution, latest emissions are used to fill data gaps.

Data was adjusted to address errors in self-reported raw data and changes in the methodology. Aggregate emissions data displays 'minimum' and 'maximum' emission values, and information of the type of data used (reported/estimated/interpolated). At the entity level, due to data limitations, we only show a subset of self-reported financed emissions. This is a first (Beta) attempt at aggregating emissions data. As such, it is subject to further refinement and improvements.

Data Sources: Asset Impact, CDP, CPI, ESG Book, MSCI, Net-Zero Donut, NZDPU