TPI Centre: Banks must expand emission reduction target coverage 

September 7th, 2023

The Transition Pathway Initiative Global Climate Transition Centre (TPI Centre) has called on banks to broaden their emission target coverage to include all material financing activities.

The TPI Centre’s Net Zero Banking Assessment Framewok found just one of 26 banks it assessed covered both on- and off-balance sheet activities in its net zero emissions commitments, which could allow banks to finance high-emitting activities in the long term.

The report also found that none of the assessed banks disclosed their share of total finance directed towards climate solutions over the past year.

Furthermore, just six have disclosed a commitment to end all on- and off-balance sheet activities that finance new coal capacity immediately.

TPI Centre acknowledged that a lack of standardised methodologies and insufficient data from clients is hindering progress on banks’ climate action.

However, it argued that these challenges should not prevent banks from forming estimates or proxy data for financed and facilitated emissions to support their net zero strategies.

The report also recommended that banks should provide a time-bound plan with milestones to cover all financed emissions in their sectoral targets. It also called on banks to include climate-related issues and risk analysis in annual reports and financial statements.

Overall, the report praised the banks for the progress made since its 2022 banking report, welcoming the increase in the number of banks that have disclosed a commitment to net-zero generally.

Indeed, the report found 20 of the 26 banks have now disclosed a net zero commitment, up from 18 banks in its pilot study launched in 2022.

It said: “This is significant because net zero commitments usually set the overarching objective of an organisation’s decarbonisation strategy.”

The TPI Centre report follows the Science Based Targets Network (SBTN) issuing the first science-based targets for how companies measure and quantify their environmental impacts in June. The goal of the targets is to empower companies to take measurable action on nature and climate change.