Net Zero Finance Tracker Methodology 2025

The Net Zero Finance Tracker (NZFT) Methodology 2025 describes a framework for assessing the Paris Agreement alignment of 1,500 global financial institutions, representing approximately USD 286 trillion in assets. The methodology employs a three-dimensional approach—Targets, Implementation, and Impact—using a mix of qualitative tiered scoring and quantitative metrics. Key updates for 2025 include expanded institutional coverage, the integration of new frameworks such as the TPT and OECD, and the use of Large Language Models (LLMs) for primary data extraction from corporate reports. The document details how the NZFT tracks mitigation targets, climate risk management, and financial flows to clean energy and fossil fuels, while introducing an ownership attribution approach to link financial holdings to real-economy emissions and physical risks.

• The NZFT has significantly expanded its scope for 2025, now covering 1,500 top global financial institutions with combined assets under management/owned (AUM/O) estimated at USD 286 trillion, which represents approximately 60% of global financial assets.
• The assessment framework is organized into three dimensions of progress: Targets (signaling intent), Implementation (factoring climate into decision-making), and Impact (creating real-economy effects).
• Qualitative indicators for Targets and Implementation use a tiered scoring system ranging from 'No action' to 'Best Practice', with a new 'Advanced' rating introduced in 2025 for greater granularity.
• The Impact dimension utilizes quantitative indicators to measure financed emissions, physical climate risk (Value at Risk for the top 500 corporates), energy portfolio exposure, and both project-level and corporate-level credit financing.
• CPI employs an ownership attribution approach to link the financial system to the real economy, reattributing direct investments in energy projects based on equity/shareholder ownership and corporate lending ownership.
• The methodology integrates a Large Language Model (LLM) using OpenAI and Pinecone API to efficiently extract data from PDF reports, achieving an initial manual evaluation accuracy rate of 80%.
• A comparison between self-reported and estimated emissions revealed that for 28% of the sample where both were available, CPI's estimated emissions were on aggregate 34% higher than those reported by the financial institutions.
• The NZFT applies specific validity rules to data to prevent overstating progress: target information is considered valid for 5 years, while most implementation actions are valid for 3 years.

APA

Micale, V., Li, S., Marini, N., Taylor, M., Burnett, J., Dilworth, E., Zhang, T., & Abutu, D. (2025). Net Zero Finance Tracker Methodology 2025. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2025/10/NZFT-Methodology.pdf

Chicago

Micale, Valerio, Shengzi Li, Nikita Marini, Maddy Taylor, Joe Burnett, Eddie Dilworth, Tinglu Zhang, and Daniel Abutu. Net Zero Finance Tracker Methodology 2025. Climate Policy Initiative, 2025. https://www.climatepolicyinitiative.org/wp-content/uploads/2025/10/NZFT-Methodology.pdf.

Wikipedia

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BibTeX

@techreport{micale2025net, author = {Micale, Valerio and Li, Shengzi and Marini, Nikita and Taylor, Maddy and Burnett, Joe and Dilworth, Eddie and Zhang, Tinglu and Abutu, Daniel}, title = {{Net Zero Finance Tracker Methodology 2025}}, institution = {Climate Policy Initiative}, year = {2025}, month = nov, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2025/10/NZFT-Methodology.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }