Our inaugural 2024 Catalyst Contest hosted a global search for breakthrough financial solutions to decarbonise the banking sector and real economy and comes in response to concerns that sustainable finance initiatives are not having a big enough impact and progress towards net zero is too slow.1

The Contest focused on finding promising ideas that can be developed into practical and tangible innovations and scaled up rapidly and effectively by banking and financial institutions. It is about moving the industry beyond disclosure, reporting and transition plans, as they are not enough to drive meaningful action on their own.

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The Banking on Climate Justice initiative is a collaborative engagement launched in April 2023 with members of the Climate Safe Lending Network. Since then, participants from a variety of geographies and sectors have come together in hopes of raising the ambition of the sector to address justice whilst transforming itself in the face of the climate crisis.

The goals:

• Explore why climate justice should be integrated into all strategic decisions for stability

• Illuminate practical ideas that can serve as inspiration for how the banking sector might begin making systemically impactful shifts

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The Pathway to Climate Safe Lending is five progressive levels of positive climate performance which lead to total bank balance sheet decarbonization:

• Taking Responsibility for Climate Risk

• Being Accountable for Climate Impact

• Stopping the Flow to Fossil Fuels

• Decarbonizing Economies and Balance Sheets

• Financing Innovation for a Sustainable Future

The pathway is not a sequence.  Rather these are the essential parts of a journey for banks aiming to align with keeping well below a 2 degree rise in global temperatures.

Aligning funding from lending institutions with the transition to a net-zero carbon economy in a timescale that helps us avoid the most severe destruction from climate change requires rapid progress across the whole financial sector. Taking the Carbon Out of Credit was published in July 2020 to set out an integrated mechanism, along with practical tools, for banking institutions that commit to demonstrating leadership in addressing climate change.

Highlights:

• Broadening risk management to encompass systemic as well as financial risks.

• Assessing impact and setting targets using the Three Horizons Approach to Climate Safe Lending.

• A Climate Safe Lending Decarbonization Toolkit that includes 10 interventions for helping banks make a positive difference.

• What it means to be a Triple-A Bank of the Future.

Read more here.

To help banks set a course to the best version of a transition plan they can create, CSLN gathered input from a wide range of stakeholders to co-create The Good Transition Plan, launched in 2021 for COP26.

Since the publication of this strategy guide, we believe the time has come for preparation – measurement, target-setting and transition planning – to be translated into real action. That means practical interventions which will drive significantly better outcomes for everyone. By leveraging the ideas, expertise and diverse perspectives of our multi-stakeholder network, we are supporting banks in navigating towards a net zero future.

We are pleased to provide a suite of free strategy tools, aligned with the GFANZ framework for financial institution transition plans, to help guide discussions and decisions within banks (and between banks and their stakeholders) for developing a Good Transition Plan — a living document that is continuously updated with observations and insights from interactions with clients and stakeholders, and perceptions of emerging developments within society and the economy.

Access the tools here.

As companies increasingly focus on combating climate change, this report reveals that for many of the world’s largest companies, the carbon footprint generated by their investments and cash held in big banks are a significant source, and sometimes their largest source, of emissions. The report also provides a groundbreaking analysis of the hidden climate impact of corporate finances, making it possible to understand the scale of emissions generated by a company’s cash, investments, and financial practices.

This report illuminates how the financial system, particularly the banking sector, undermines the sustainability efforts of climate-conscious companies. Corporate cash and investments do not just sit passively in bank accounts accruing interest. Rather, this money is used to finance everything from energy development to construction projects to small business loans, all of which generate emissions that banks and companies contribute toward.

Read more here.