AUM in Action

Investors Set Ten Tests for Banks’ Transition Plans

A new ten-point standard has outlined investor expectations for banks’ net zero transition strategies, with the intention to support constructive engagement and aid ongoing implementation of climate commitments. The standard addresses banks’ transition plans across ten areas: net zero commitments; targets; exposure and emissions disclosure; emissions performance; decarbonisation strategy; climate solutions; policy engagement; climate governance; just transition; and annual reporting and accounting disclosures. It was developed by the Institutional Investors Group on Climate Change (IIGCC), in consultation with the Transition Pathway Initiative Global Climate Transition Centre (TPI Centre). The IIGCC said the standard complements the Net Zero Investment Framework, used by Paris-Aligned Asset Owners to help decarbonise their portfolios. TPI Centre has also developed a Net Zero Banking Assessment Framework to assess 26 global banks, with the first assessments due in summer 2023. The assessments will capture the progress made by banks to date and the ongoing implementation of their stated climate-related policies and plans.  The framework “captures bank-specific levers of influence” on corporate behaviour and climate outcomes, it said. “While the need to align financing with a net zero future is now well understood within most bank boardrooms, action to change financing decisions has been too timid. Shareholders make clear their expectations that banks align all their financing – whether it’s lending, project finance or capital markets activities – with the goals of the Paris Agreement,” said Natasha Landell-Mills, Head of Stewardship, Sarasin & Partners.


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