Making finance consistent with climate goals

The report assesses the current state of climate target-setting among the world's largest financial institutions, arguing that portfolio-level net zero targets are insufficient for achieving 1.5°C. It highlights that 'universal owners'—large asset managers with global exposure—possess significant but underutilized leverage to influence the real economy. The document identifies three primary channels for influence: exclusion, divestment, and engagement, noting that current adoption of climate-relevant exclusion and divestment policies remains low among the top 50 asset managers and owners.

• A high percentage of the largest financial institutions have adopted 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.
• Portfolio-level net zero targets are considered inadequate instruments for achieving 1.5°C because the link between investor decisions and actual emissions in the real economy is poorly understood.
• Large asset managers, acting as 'universal owners' with global portfolio exposure, have a direct interest in mitigating climate-fuelled value destruction, yet they have not meaningfully pressured high-emitting companies to decarbonize.
• Institutional investors underutilize three main channels of influence: exclusion, divestment, and engagement. Specifically, only about 50% of the 50 largest asset managers and under 20% of the 50 largest asset owners have climate-relevant exclusion policies, while fewer than 10% of both groups have divested from emissions-intensive assets.
• Engagement efforts are limited 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} }