State of Transition in the Banking Sector 2024

The State of Transition in the Banking Sector 2024 report provides a comprehensive assessment of how major banks are progressing towards the low-carbon transition and aligning with the Paris Agreement. Using the Net Zero Banking Assessment Framework (NZBAF) and Carbon Performance metrics, the report enables investors to evaluate banks’ climate strategies, governance and financed emissions.

The TPI Centre began assessing the banking sector’s progress on the low-carbon transition with a pilot study in 2022. This 2024 report provides an evaluation of 26 major international banks, 10 US super-regional banks and two US custodian banks, on two elements:

1. NZBAF
2. Carbon Performance

The results of our 2024 assessment send a clear message: the overwhelming majority of banks are still in the early stages of their transition to a low-carbon economy. This is despite the fact that most banks we assess are now publicly disclosing some of their financed emissions and half are committing to reducing them to net zero by 2050. Yet, banks score poorly on both the NZBAF and Carbon Performance assessments.

Drawing on the trends identified in our assessment data, the investor expectations as set out in the IIGCC’s Net Zero Standard for Banks (IIGCC, 2023) and the Transition Plan Taskforce’s Bank Sector Guidance (TPT, 2023), we recommend that banks do the following:

• Expand the scope of commitments, targets and policies
• Strengthen the alignment of existing sectoral targets
• Develop robust accounting methodologies for capital market activities
• Close loopholes in financing policies
• Turn sustainable finance targets into more meaningful commitments