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Tackling the challenges of the net-zero transition

How the financial services industry can boost credibility through measurement

Financial institutions have a significant role to play in advancing net-zero by 2050. The sector is already showing an appetite for this challenge and an undertaking to help green the global economy.

A growing number of financial institutions have pledged to make their portfolios net-zero by 2050 or sooner, and a few have already started measuring their financed emissions. However, measuring financed emissions is a complex challenge further hindered by the lack of a single global measuring standard, common database to source the data, or data framework for what data companies should measure.

Despite this challenge, financial institutions should start preparing their sustainability data. There are emerging solutions and developing measurement standards available to get companies started. Data collection, assessing its integrity, and identifying gaps are time-consuming. Financial institutions cannot set KPIs aligned to net-zero strategic lending priorities and regulatory obligations without having sustainability data.

This report focuses on the measurement challenges of net-zero in the financial services industry.

We believe that financial institutions can start to build a robust approach for measuring their financed emissions with five practical steps. They are:

  • Align their strategy and business model with their sustainability goals
  • Recognize measuring financed emissions is a new area of responsibility
  • Determine which type of assets their portfolio contains and what activities are in scope
  • Determine data sources and overcome gaps in their data by calculating an approximation
  • Finally, calculate their emissions using existing methodologies as a guide.

Learn more at Deloitte’s Climate Exchange.

Deloitte sponsored an Institute of International Finance COP Talk on 8 November 2021 called “The World is Waiting: Advancing Net Zero Commitments in Financial Services.” Those who are members of the IIF can view the webcast at the IIF website.

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