Financing 1.5°C: Six Trends to Watch in 2023

This briefing from RMI's Center for Climate-Aligned Finance (CCAF) outlines six key trends expected to influence the climate strategies, implementation, and reporting of financial institutions (FIs) in 2023. These trends include the shift toward short-term transition plans, the political debate surrounding ESG, the growth of renewable energy investment, the need for workforce upskilling, increased regulatory scrutiny of greenwashing, and the move toward using transition-relevant data for portfolio steering.

• Financial institutions are shifting from long-term to short-term target setting, with 26 of the 30 largest banks in Europe, Canada, and the United States having published 2030 emissions reductions targets. The focus in 2023 is expected to move toward the publication of net-zero transition plans, defined by GFANZ as a "set of goals, actions, and accountability mechanisms to align an organization’s business activities with a pathway to net-zero."
• ESG investing faces a political backlash, particularly from Republican lawmakers in the United States who are threatening penalties and legislation against firms incorporating ESG factors. Despite this, businesses and investors continue to view climate change as having "material financial implications."
• Investment in renewables is growing while fossil fuel demand plateaus. In 2022, an estimated $226 billion was deployed into new renewable energy. Growth in the US sector is supported by the Inflation Reduction Act, while Indonesia has committed $20 billion in financing to transition to renewables. Additionally, H2 Green Steel secured €260 million in equity for the first large-scale green steel plant.
• Financial institutions are expanding climate expertise beyond siloed sustainability teams by upskilling front-office employees. An example is NatWest, which in April 2022 entered a £1.5 million, three-year agreement with the University of Edinburgh to provide climate education to 16,000 employees.
• Regulatory pressure on greenwashing is increasing. The US SEC has sued BNY Mellon for $1.5 million over fund-labeling issues and is expected to finalize a climate disclosure ruling in 2023. The UK's Financial Conduct Authority has proposed sustainability labels and restrictions on terms like "green" or "ESG," with final rules expected by mid-2023. The SEC's proposed Fund Names Rule would require ESG-labeled funds to have at least 80 percent exposure to ESG assets.
• FIs are moving from setting financed emissions baselines to using transition-relevant data to steer portfolios. The Sustainable STEEL Principles (SSP) provide a methodology for banks to assess the climate alignment of steel producers using a climate alignment score. CCAF also plans to launch an aviation climate-aligned finance (CAF) agreement in 2023.

APA

RMI (2023). Financing 1.5°C: Six Trends to Watch in 2023. https://rmi.org/resources/financing-1-5c-six-trends-to-watch-in-2023/

Chicago

RMI. Financing 1.5°C: Six Trends to Watch in 2023. 2023. https://rmi.org/resources/financing-1-5c-six-trends-to-watch-in-2023/.

Wikipedia

{{cite report |author=RMI |title=Financing 1.5°C: Six Trends to Watch in 2023 |date=19 January 2023 |url=https://rmi.org/resources/financing-1-5c-six-trends-to-watch-in-2023/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2023financing, author = {{RMI}}, title = {{Financing 1.5°C: Six Trends to Watch in 2023}}, institution = {RMI}, year = {2023}, month = jan, url = {https://rmi.org/resources/financing-1-5c-six-trends-to-watch-in-2023/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }