The Transition Pathway Initiative (TPI) Centre’s Net Zero Banking Assessment Framework won over the judges of the Sustainable Investment Awards for its potential to improve transparency in the often-opaque area of banking and its impacts on the climate.
The Net Zero Banking Assessment Framework was developed in consultation with the Institutional Investor Group on Climate Change (IIGCC) and Ceres to assess banks' preparedness for the low-carbon transition. It was published alongside the IIGCC’s Net Zero Standard for banks.
The TPI Centre framework includes what it calls an innovative target alignment matrix for banks that combines financed emissions and a scientifically robust implementation of the sectoral decarbonisation approach (SDA). This analysis allows users to understand the ambition of banks’ sectoral decarbonisation targets by comparing them against low-carbon benchmarks. Users can also conduct peer comparisons between the targets of different major banks.
In addition, the framework assesses banks across 10 areas, including climate governance, policy engagement, and the integration of Just Transition principles. These indicators reflect a comprehensive and future-proof set of indicators focusing on the conditions the bank has created internally to support the delivery of its targets. All data and underlying documentation are available open-source on the TPI Centre’s website. The analysis will be updated and expanded in Q3 2024.
The Framework enables users to benchmark banks against a comprehensive set of indicators covering the full range of bank activities, highlighting climate ‘leaders’ but also identifying banks that are not yet prepared for a low-carbon transition.
The framework can be used to support investor engagement with banks and strategic planning by banks themselves.
A Sustainable Investment Awards judge praised the tool, adding: “It is central to address the responsibility of the banks for supporting the transition. [It is an] often overlooked sector with poor transparency and difficult to address as an investor … It is important to contribute to the transparency in the market.”
