Financing 1.5°C: Six Trends to Watch in 2023

The briefing outlines six trends for financial institutions in 2023: the rise of short-term transition plans, political backlash against ESG investing, the growth of renewables over plateauing fossil fuels, the need for climate upskilling of employees, increased regulatory scrutiny on greenwashing, and the shift 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. 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," are expected to become the baseline for credible reporting in 2023.
• Despite a political backlash in the United States where Republican lawmakers have threatened penalties for firms incorporating ESG factors, investors increasingly view climate change as having "material financial implications."
• Investment in renewable energy is accelerating as fossil fuel demand plateaus, evidenced by an estimated $226 billion deployed into new renewable energy in the first half of 2022. Specific examples include Indonesia's $20 billion commitment to transition to renewables and H2 Green Steel's €260 million in equity financing for a large-scale green steel plant.
• Financial institutions are moving beyond hiring external experts to upskilling existing front-office staff. For instance, NatWest entered a £1.5 million, three-year agreement with the University of Edinburgh in April 2022 to provide climate education to 16,000 employees.
• Regulatory pressure on greenwashing is increasing. The US SEC sued BNY Mellon for $1.5 million over fund-labeling issues, and the SEC is expected to finalize a climate disclosure ruling in 2023. Additionally, the UK's Financial Conduct Authority has proposed sustainability labels and restrictions on terms like "green" or "sustainable," with final rules expected by mid-2023.
• Financial institutions are transitioning from using backward-looking financed emissions baselines to "transition-relevant data" to steer portfolios. The Sustainable STEEL Principles (SSP) provide a methodology for banks to assess the climate alignment of steel producers; a similar aviation climate-aligned finance agreement is expected 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} }