Banks are connected to every part of the economy through their investing and lending activities. That means they play a crucial role in financing the transition to a low-carbon economy.
The financial sector is increasingly aware of the need to shift capital flows away from companies and activities that contribute to the climate problem and into climate solutions. However, they are just getting started in thinking through and strategizing on how best to respond—and tracking the climate progress of financial institutions has proven notoriously challenging.
Are banks moving their financing in the right direction? It's a very tough question to answer.