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European Financial Institutions are Leading the World in Aligning their Portfolios to the Paris Agreement

In 2021, some 61% of European financial institutions reported taking action to align their portfolios with the Paris Agreement, compared to 40% in North America and 49% for the rest of the world.

Financial institutions’ own performances in meeting their targets will be based on the emissions associated with their portfolios and their alignments with the 1.5 degrees Celsius target on warming. It is essential that they disclose financed emissions fully, and we have already seen a notable uptick in reporting.

Going forward, financial institutions will be keen to partner with companies to partner with and support companies through the transition and not simply to divest. However, as institutions consider new investments and financing, they will be more focused both on companies’ current emissions and the credibility and rigor of transition plans to drive them down.

Exhibit 1: % of financial institutions that are taking actions to align their portfolios to a well-below-2°C world, 2020-2021