Less than 40% of financial institutions worldwide have disclosed long-term net zero targets, and only a tiny proportion of these include interim goals aligned with climate science, according to the World Benchmarking Alliance (WBA).
Around 400 banks, asset owners, asset managers and insurers were assessed on their contribution towards a just and sustainable economy through the WBA’s Financial System Benchmark for the research, which was published to coincide with the COP27 UN Climate Summit in Egypt.
The aim is to build accountability for business performance towards the UN Sustainable Development Goals (SDGs), highlight the significant gap in robust climate targets and transparency across the global financial sector.
The study found that only 20% publicly acknowledge their impact on people and planet, with less than 5% admitting they have a process to identify the impact of their activities on nature.
In addition, only 2% have been translated into interim targets, of which just 1% are backed by scientific evidence.
Less than 5% acknowledge they have a process to identify the impact of their financing activities on nature.
“While we recognise that great efforts are being made by many, frustration is high and trust in the sector is low,” said WBA’s financial systems lead Andrea Webster.
She added, “This Benchmark provides a basis for hard but meaningful conversations. There is no hiding from the fact the world is behind on where it should be towards net zero and in ensuring that no one is left behind. We need a social transition as well as an energy transition.
They’re evaluating institutions across asset classes on their alignment with the UN Guiding Principles. It’s really starting to raise a lot of questions among institutions that have been, I’ve found in the past, rather quiet and more focus on environmental issues, for example.”
The release of the Financial System Benchmark will be followed by the publication of a full Insights Report in 2023.
