Net Zero Banking Assessment Framework methodology note - version 1.0

The Net Zero Banking Assessment Framework methodology note - version 1.0 outlines how banks are evaluated on their preparedness for the low-carbon transition and alignment with global climate targets, including the Paris Agreement. The methodology provides a structured framework to assess banks’ climate-related disclosures, strategies and targets, enabling investors to evaluate how financial institutions are managing climate risks and supporting decarbonisation.

Built on the Net Zero Banking Assessment Framework (NZBAF), developed in collaboration with investor groups such as the Institutional Investor Group on Climate Change (IIGCC) and Ceres, the methodology evaluates banks across 10 key areas, including net zero commitments, sectoral targets, emissions disclosure, decarbonisation strategy, climate governance and just transition. It uses a set of objective, disclosure-based indicators to ensure transparent, comparable assessments based on publicly available data.

The framework also incorporates analysis of financed emissions, recognising banks’ indirect but significant impact on real-world emissions through their lending and investment activities. By providing clear definitions, indicators and assessment criteria, the methodology supports consistent evaluation of banks’ progress and helps investors identify leaders and laggards in the transition to a net zero financial system.