"Banks have reduced their low-carbon ambition overall, with some even cancelling their commitments, targets and policies outright”
“Banks have reduced their low-carbon ambition overall, with some even cancelling their commitments, targets and policies outright”, according to the latest report published today (13 October 2026) by the TPI Global Climate Transition Centre (TPI Centre) at the London School of Economics.
In its ‘State of the Banking Transition 2026’ report, the TPI Centre analysed the climate ambition of 36 of the largest banks by market capitalisation and total assets using two elements: the Net Zero Banking Assessment Framework (NZBAF) and Carbon Performance (CP) for Banks. The NZBAF is a framework spanning nine topics that evaluates banks’ overall performance in managing the low-carbon transition and Carbon Performance shows which sectors and business activities are covered by banks’ sectoral emissions reduction targets.
This year, for the first time since 2019, none of the 26 banks assessed for the last three years, has set new climate targets. Two European banks, assessed for the first time this year, are the only banks to set new targets in 2026. Since peaking in 2022 and 2023, following the 2021 UN climate summit (COP26), sectoral target-setting has declined sharply.
Across eight of the nine areas of the NZBAF, scores have either remained flat or fallen since 2024. On average, the 36 banks assessed this year score on only 21% of the 72 sub-indicators (questions), and no bank scores on more than a third of the sub-indicators.
Over the last year, half of the assessed banks have weakened their disclosures on at least one sub-indicator of the framework. The area where scores have decreased the most is on net zero commitments. In 2026, banks met an average of 22% of the sub-indicators in this area, down from 33% in 2024. On financing conditions for high-emission companies, eight banks have weakened their disclosures between 2024 and 2026.
The research team also found that scores vary significantly depending on where a bank is based. Banks in Europe score highest on the framework, meeting the criteria for 27% of the sub-indicators. Every EU bank scores on areas related to disclosures of financed emissions and financial exposure to high-emission sectors, reflecting the region's mandatory disclosure requirements. US banks score on just 13% of questions and have retreated in recent years, amid sustained anti-ESG pressure. Chinese banks score low (6%), with scores concentrated in climate solutions financing, an area the state has prioritised. Regulation is not the whole story, however, as even within the same jurisdiction, bank scores vary considerably. In Europe, the best and worst performers are around 15 percentage points apart.
The report contains a novel focus section on banks’ recognition of climate-related risks in financial statements, an area where disclosure is emerging. While 30 of 36 banks assessed classify climate-related risks as a key risk, only seven disclose the accounting assumptions and judgments they use to estimate these risks in their financial statements; the seven banks that disclose are all European, which may reflect increasing supervisory scrutiny in the region.
To see the research or for interviews with the authors, please contact Liam Collins on l.collins4@lse.ac.uk or gri.media@lse.ac.uk.
1 This figure is subject to market-price and foreign-exchange fluctuations and, as the sum of self-reported data by TPI supporters, may double-count some assets.