Making good on financial sector net zero commitments

The report examines the gap between high-integrity net zero standards—such as those from the UN High-Level Expert Group (HLEG)—and the actual practices of corporations and financial institutions (FIs). It identifies significant shortcomings in target coverage, fossil fuel phase-out policies, and the credibility of transition plans. The authors argue that voluntary commitments are often unrealistic without government intervention and propose a 'road to regulation' consisting of an 'accountability lane' for oversight and an 'ambition lane' to translate voluntary pledges into economy-wide policy mandates.

• The UN High-Level Expert Group (HLEG) defines 'high-integrity' net zero commitments as those covering an actor's entire greenhouse gas footprint, including direct and indirect emissions, and for financial institutions, both financed and facilitated emissions.
• There is a significant gap between voluntary commitments and actual performance; a 2022 Accenture analysis indicates that 93% of the world's largest companies are projected to fail in meeting their net zero targets based on current trends.
• Financial institutions often have limited target coverage; for example, members of the Net-Zero Asset Managers (NZAM) initiative may have commitments covering as little as 0.55% of assets under management.
• Many financial institution net zero initiatives lack binding policies on fossil fuel phase-outs, with some members avoiding blanket phase-out dates for oil and gas due to antitrust concerns and legal risks, particularly in the United States.
• The European Central Bank reports that 90% of banks in the Euro-area have portfolios that are misaligned with the goals of the Paris Agreement.
• Transition plans in the fossil fuel sector are largely non-existent; a review of 112 fossil fuel companies found that none had plans to fully transition away from extraction and production.
• There is a conceptual lack of clarity regarding 'residual emissions'—those remaining after maximum feasible reductions—which makes it difficult for companies and FIs to define their end-state net zero targets.
• The report identifies a 'road to regulation' with two lanes: an 'accountability lane' focused on standards, disclosure, and oversight, and an 'ambition lane' where voluntary commitments are transformed into economy-wide policy mandates.
• Financial institutions frequently include disclaimers in their net zero commitments, stating that their success is contingent upon governments meeting their own Paris Agreement obligations.
• Guidance on equity, 'fair share' contributions, and just transitions is largely underdeveloped and disconnected from the policy processes needed to operationalize these concepts.

APA

Broekhoff, D., & Verkuijl, C. (2024). Making good on financial sector net zero commitments. Stockholm Environment Institute. https://www.sei.org/wp-content/uploads/2024/10/net-zero-financial-commitments-sei2024-045.pdf

Chicago

Broekhoff, Derik, and Cleo Verkuijl. Making good on financial sector net zero commitments. Stockholm Environment Institute, 2024. https://www.sei.org/wp-content/uploads/2024/10/net-zero-financial-commitments-sei2024-045.pdf.

Wikipedia

{{cite report |last1=Broekhoff |first1=Derik |last2=Verkuijl |first2=Cleo |title=Making good on financial sector net zero commitments |publisher=Stockholm Environment Institute |date=October 2024 |url=https://www.sei.org/wp-content/uploads/2024/10/net-zero-financial-commitments-sei2024-045.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{broekhoff2024making, author = {Broekhoff, Derik and Verkuijl, Cleo}, title = {{Making good on financial sector net zero commitments}}, institution = {Stockholm Environment Institute}, year = {2024}, month = oct, url = {https://www.sei.org/wp-content/uploads/2024/10/net-zero-financial-commitments-sei2024-045.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }