The disclosure of greenhouse gas (GHG) emissions by financial institutions, as well as their adoption of GHG emission reduction targets and other related commitments, are useful in at least two ways. First, central banks, financial regulators and investors can better understand the financial institutions’ climate-related performance and whether those institutions’ strategy and governance are capable of adequately managing existing risks. Second, it can allow investors and other stakeholders to make informed decisions based on company’s climate-related goals and performance against those goals.
Previously, the OECD analysed the metrics and methodologies used by five voluntary frameworks to support the monitoring of financial institutions’ net-zero commitments (OECD, 2023[1]). The conclusion was that while voluntary frameworks provide a valuable resource on the information to be disclosed by financial institutions, more could be done to outline a clear set of specific and credible metrics.
This paper builds on the previous work by assessing current disclosure practices in the financial sector. The second chapter identifies the main data gaps for a stakeholder willing to assess financial institutions’ progress against their GHG emission reduction targets, including net-zero commitments, using prominent third-party (commercial) data providers. The third chapter presents an analysis of the available data on existing GHG emission reduction targets and underwriting activities. The fourth chapter proposes how policymakers and financial authorities could use the findings in this paper to reduce data gaps, improve data quality and assess net-zero commitments at a sector level.
The paper defines “financial institutions” to include companies in the following industries: (i) retail and commercial banks (commercial banks, consumer finance, and mortgage finance); (ii) insurance companies; (iii) investment banks (including brokerage services); and (iv) asset managers (including custody activities). Analysis is typically by industry or, when data is limited, for all financial institutions.
The paper analyses disclosure practices considering both the individual number of companies adopting specific practices and the sizes of the institutions doing so. The metrics used as a proxy of the size of the financial institutions and their potential impact on financial markets are the total assets of institutions as informed in their financial statements and their assets under management (AUM). Notably, their total owned assets include the loans or other forms of credit they extend to their clients. AUM are the resources their clients own that financial institutions may invest in equity, bonds and other assets.
The dataset developed for this paper’s coverage varies depending on the data point. For instance, it includes information on 1 167 listed financial institutions with total owned assets of USD 171 trillion and USD 120 trillion of AUM at the end of 2024, whether they reported some or all of their GHG emissions in 2023 or 2024. This sample is from a wider universe of 4 922 listed financial institutions globally with total owned assets of USD 194 trillion and USD 139 trillion of AUM.