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- 45% of financial firms now have a Chief Sustainability Officer (CSO), tripling from just 15% in 2020.
- Only 3% of firms are confident in their ability to assess climate risks for individual customers, highlighting a major gap in risk management.
- Net-zero commitments drive real change: firms that commit show higher product innovation, deeper governance integration, and faster progress in sourcing ESG data.
Financial Institutions at the Forefront of Net-Zero Transition
The financial sector plays a pivotal role in global decarbonization, yet urgent gaps remain. According to a joint report by Deloitte and the Institute of International Finance (IIF), 45% of financial firms now employ a Chief Sustainability Officer (CSO), up from just 15% in 2020.
“CEOs are used to making big calls. It’s like when a CEO says they’re going to cut $5 billion from their cost base. They don’t know, ahead of time, every last detail of the plan. First, they do some analysis, then they go public—and then they work out how to get it done,” explained one industry leader in the report.
The Push for Net-Zero
With greenhouse gas (GHG) emissions needing to peak before 2025 and fall by over 40% in the following five years, financial firms are accelerating their sustainability commitments. Firms making net-zero pledges exhibit:
- Greater integration of sustainability in corporate strategy.
- Higher levels of product innovation.
- Faster progress in recruiting sustainability talent and sourcing ESG data.
“Net-zero is no longer a nice to have—it’s a must-have,” said one executive, reinforcing the shift in industry priorities.
Governance and Execution: A Work in Progress
While progress is evident, financial institutions face structural challenges in executing net-zero commitments:
- Governance structures: 70% of firms now have a CSO or equivalent, but integrating net-zero into core business functions remains a challenge.
- Risk assessment: Only 3% of firms rate their ability to assess climate risks for individual customers as fully developed.
- Data quality: While 80% of firms have sourced Scope 1 and 2 emissions data, Scope 3 data—a crucial factor in financed emissions—remains a major hurdle.
“It’s a big area where we have to improve. The entire organization needs data to comply and deliver,” admitted one sustainability executive.
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Innovation in Finance
Financial institutions are responding to net-zero demands with new products and services:
- 25% of firms have launched net-zero products for industries such as energy, real estate, and transportation.
- Banks are forming ESG advisory teams to assist clients in transition finance, covering areas like hydrogen and carbon capture.
- New risk models are being developed, but firms still lack confidence in climate risk quantification.
The Path Ahead
Financial institutions must move beyond commitment to execution, leveraging cross-functional collaboration and robust governance structures. The industry’s collective response will shape not just financial market stability but also the global net-zero trajectory.
“We hope the insights that financial services executives generously share in our survey inform you as you progress along your own journey to a low-carbon future,” wrote Tim Adams, President and CEO of IIF, and Sharon Thorne, Global Chair of Deloitte.
The race to net-zero is on, and financial firms have no time to waste.
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