Shifting Climate Scenarios Make Bank Net-Zero Pledges Harder

For investors struggling to get a clear read on how banks are delivering on their net-zero pledges, changes to climate scenarios made necessary by shifting realities may further complicate the picture.

Most major banks in Europe and North America have followed the same playbook for net zero: make an overarching commitment to eliminate net-financed emissions by 2050; then determine which are the most carbon-intensive parts of the loan book and set shorter-term targets (typically for 2030) to reduce emissions when lending to those sectors; and third, add more sectoral targets covering an ever-increasing share of the balance sheet.

A fourth stage ...