Climate-related risks can also impact the debt serviceability of borrowers, particularly those in carbon-intensive industries. Banks must carefully evaluate the climate exposure of their clients and work with them to develop transition strategies. This may involve setting science-based targets for emission reductions, providing sustainable finance solutions, and gradually phasing out investments in high-carbon sectors.

To effectively contribute to the climate transition, banks must significantly reduce their financed emissions and decarbonize their portfolios. This requires measuring and disclosing the carbon footprint of their loans and investments, setting ambitious emission reduction targets, and developing comprehensive decarbonization strategies. Banks should also collaborate with stakeholders, including regulators, investors, and clients, to create an enabling environment for sustainable finance and drive systemic change.

Instituting long-term transition plans is crucial for banks to navigate the challenges and opportunities presented by the climate transition. These plans should align with the goals of the Paris Agreement and include interim targets, regular progress monitoring, and mechanisms for continuous improvement. By embedding sustainability into their core strategies and decision-making processes, banks can position themselves as leaders in the low-carbon economy and contribute to a more resilient and sustainable future.

auctusESG works with large financial institutions including public and private sector banks, investors, non-banking finance companies, and institutional investors such as pension funds and insurance companies.