Financial services industry tackles the net-zero transition

The burden of gathering sustainability data

The financial services industry a significant role to play in advancing net-zero goals. The sector is already showing an appetite for this challenge and an undertaking to help green the global economy.

A growing number of financial institutions have pledged to make their portfolios net-zero by 2050 or sooner, and a few have already started measuring their financed emissions. But measuring financed emissions is a complex challenge that’s further hindered by the lack of a single global measuring standard, common database to source the data, or data framework for what data companies should measure.

Despite this challenge, financial firms should start preparing their sustainability data. There are emerging solutions and developing measurement standards available now that can help companies started. Data collection, assessing its integrity, and identifying gaps are time-consuming. And financial institutions cannot set KPIs aligned to net-zero strategic lending priorities and regulatory obligations without having sustainability data.

How to begin measuring your financed emissions

We believe that the financial services industry can start to build a robust approach for measuring their financed emissions with five practical steps:

1. Align your firm’s strategy and business model with your climate change goals
2. Recognize that measuring financed emissions and temperature alignment is a new and important area of your fiduciary responsibility
   
3. Determine the range of carbon-intensive assets in your portfolio and boldly widen the sectors and exposures it includes to give credibility to your net-zero commitment
   
4. Determine data sources and overcome gaps in your data by calculating an approximation
   
5. Calculate your emissions using the most prevalent science-based methodologies as a guide and then converge, as an industry, on a single methodology
   

Learn more at Deloitte’s Climate Exchange.

Embracing the net-zero transition as a business goal

To contribute fully to the world’s net-zero ambition and meet regulatory requirements, the financial services industry needs to come together to develop solutions for measuring, managing, and mitigating financed emissions and climate-related risk within the financial system.

If you’re interested in further discussion on the topic or want to learn how we can help mobilize a common standard, let’s talk.