The Transition Pathway Initiative Centre, hosted by the London School of Economics’ Grantham Research Institute, has announced it is expanding its assessment framework for tracking the banking sector’s progress in financing climate solutions.
Announcing its 2025 banking assessment update, the TPI Centre said that this year, it was expanding its scope to include 10 new banks, increasing its total coverage to 36 major financial institutions.
These include four leading Brazilian (Banco de Brazil and Itaú) and Indian (HDFC and ICICI) banks, a number of Australian banks, and a complete list of Global Systemically Important Banks (G-SIBs).
Net Zero Banking Assessment Framework
Using its Net Zero Banking Assessment Framework (NZBAF), the TPI Centre evaluates how well banks are managing their transition to a low-carbon economy.
The research cycle consists of three stages, commencing with an initial bank assessment, which is internally reviewed and then shared with the respective banks for feedback, and to enable said institutions to substantiate any claims. Final assessments are then published on the TPI Centre’s open-access online tool.
‘Lacking clarity’
‘In addition to unclear definitions of climate solutions, banks often lack clarity on how they set and plan to meet their climate solutions targets,’ the TPI Centre said in a statement.
‘We find limited disclosure on the financial products and business activities involved and ambiguity in applying climate science to target setting. We also find insufficient progress reporting, which often consists of monetary figures that lack clear interpretation and fail to convey a clear connection to real-economy changes.’
To address this, the centre has update its ‘Area 6: Climate Solutions’ matrix, to include more targeted questioning around how banks and financial institutions have quantified their climate solutions targets and financing.
Additionally, the Carbon Performance Alignment Matrix, which evaluates how banks’ business activities align with low-carbon pathways, has been revised to better reflect both on- and off-balance sheet exposures and harmonise with standards like the Partnership for Carbon Accounting Financials (PCAF). Read more here.
