Making finance consistent with climate goals

This report by the NewClimate Institute examines the role of asset managers and owners in aligning financial flows with climate goals. It argues that while net zero portfolio targets are becoming common, they are insufficient for achieving a 1.5°C pathway. The document highlights the underutilised leverage of 'universal owners'—the largest asset managers and owners—who can influence the real economy through exclusion, divestment, and engagement, but currently fail to pressure high-emitting companies to decarbonise.

• There is a growing trend of financial institutions setting climate targets, with 90% of the 50 largest asset managers and 30% of the 50 largest asset owners having assets under a net zero or carbon/climate neutrality target.
• Net zero targets at the portfolio level are considered an inaccurate instrument for achieving a 1.5°C goal because the link between investor decisions and actual emissions in the real economy is poorly understood.
• The largest asset managers and owners, acting as 'universal owners', have significant influence over corporate access to capital and climate strategies due to their broad global exposure, yet they have not meaningfully pressured high-emitting companies to decarbonise.
• Institutional investors have three primary channels to influence emissions—exclusion, divestment, and engagement—all of which are currently underutilised.
• Specific gaps exist in the application of influence strategies: only about 50% of the 50 largest asset managers and under 20% of the 50 largest asset owners have climate-relevant exclusion policies, and fewer than 10% of both groups have divested from emissions-intensive assets or made such commitments.
• Engagement efforts are hindered by the high cost of analyzing thousands of companies, leading investors to rely on proxy advisors whose recommendations often conflict with the investors' own international climate commitments.

APA

NewClimate Institute (2022). Making finance consistent with climate goals. http://www.newclimate.org/resources/publications/making-finance-consistent-with-climate-goals

Chicago

NewClimate Institute. Making finance consistent with climate goals. 2022. http://www.newclimate.org/resources/publications/making-finance-consistent-with-climate-goals.

Wikipedia

{{cite report |author=NewClimate Institute |title=Making finance consistent with climate goals |date=16 November 2022 |url=http://www.newclimate.org/resources/publications/making-finance-consistent-with-climate-goals |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{newclimateinstitute2022making, author = {{NewClimate Institute}}, title = {{Making finance consistent with climate goals}}, institution = {NewClimate Institute}, year = {2022}, month = nov, url = {http://www.newclimate.org/resources/publications/making-finance-consistent-with-climate-goals}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }