Fixing the Broken Governance Chain: Aligning Private Finance with the Paris Agreement

The report argues that the financial sector's climate governance chain is fundamentally broken, as voluntary net-zero commitments by financial institutions and cooperative initiatives have failed to stop the flow of capital into fossil fuels. It introduces an "impact levers" framework to provide actor-specific recommendations for banks, asset managers, pension funds, and regulators to move from voluntary pledges toward enforceable standards and systemic accountability to support a Paris-aligned economy.

• The financial sector's climate governance chain is structurally unfit to support a Paris-aligned economy, with financial institutions, climate cooperative initiatives (CCIs), and regulators failing to provide necessary coordination, ambition, and accountability.
• Current voluntary approaches and CCIs, such as GFANZ, have not translated pledges into real-economy decarbonisation, while financial institutions continue to invest approximately USD 3.7 trillion annually in oil, gas, and coal.
• Regulatory environments have failed to create the incentives and rules required for Paris-aligned finance, and in some jurisdictions, climate alignment is actively undermined.
• While net-zero methodologies are the dominant approach in the financial sector, action-oriented strategies are underutilised; the report suggests using complementary levers where CCIs coordinate voluntary action and regulators correct market failures.

APA

NewClimate Institute (2025). Fixing the Broken Governance Chain: Aligning Private Finance with the Paris Agreement. https://newclimate.org/resources/publications/fixing-the-broken-governance-chain-aligning-private-finance-with-the-paris

Chicago

NewClimate Institute. Fixing the Broken Governance Chain: Aligning Private Finance with the Paris Agreement. 2025. https://newclimate.org/resources/publications/fixing-the-broken-governance-chain-aligning-private-finance-with-the-paris.

Wikipedia

{{cite report |author=NewClimate Institute |title=Fixing the Broken Governance Chain: Aligning Private Finance with the Paris Agreement |date=26 August 2025 |url=https://newclimate.org/resources/publications/fixing-the-broken-governance-chain-aligning-private-finance-with-the-paris |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{newclimateinstitute2025fixing, author = {{NewClimate Institute}}, title = {{Fixing the Broken Governance Chain: Aligning Private Finance with the Paris Agreement}}, institution = {NewClimate Institute}, year = {2025}, month = aug, url = {https://newclimate.org/resources/publications/fixing-the-broken-governance-chain-aligning-private-finance-with-the-paris}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }