Follow the leaders: Net Zero Finance Tracker informs pension funds’ climate action

The Net Zero Finance Tracker (NZFT) provides the most comprehensive assessment of private finance institutions’ progress on aligning their activities with Paris Agreement goals and delivering net zero impact.

Analysis and advisory organization Climate Policy Initiative (CPI) has created the NZFT to show how almost 1,000 private financial institutions, including more than 340 pension funds in Europe, are progressing on climate commitments. This dataset includes 51 Swiss pension funds.

Pension funds have a critical role in enabling a net zero transition, given their scale. Acting now can mitigate risk exposure to stranded assets, investment devaluation, and stakeholder concern over sustainability in the face of climate change.

The NZFT aims to measure pension funds’ performance on targets, implementation, and ultimately their impacts in the real economy. The metrics can help these funds to assess the efficacy of their actions and to benchmark against the progress of industry peers. This work can also inform policymakers and net zero coalitions seeking to spur action. Identifying where the financial industry is can help chart an effective and ambitious path forward

The platform tracks almost 1,000 private financial institutions globally—from banks to asset managers to insurers—together responsible for USD 100 trillion of combined assets under management and owned (AuM/O).

To inform the journey to net zero, CPI has conducted a deep dive report on the State of European Pension Funds’ Net-Zero Transition, covering 342 pension funds from the NZFT, representing USD 7.8 trillion in AuM/O. The number of entities in this dataset to have set a climate target has risen from four in 2019 to 100 in 2023. Given that larger funds have tended to set targets, this represents 71% of the AuM/O (USD 5.5 trillion) of our sample. Similarly, the number of funds taking implementation action grew from 26 in 2019 to 98 in 2023.

Swiss pension funds have increased initial response on targets for net zero between 2019 and 2023, but more action is needed to meet these goals. The share of the 51 Swiss entities in the NZFT to have set climate targets has risen from zero in 2019 to 20% in 2023, and 10% have taken some implementation action in their organization. Given that the larger funds have tended to take action, this means that Swiss tracked entities with 42% of AuM/O now have some form of climate target and those with 25% of AuM/O have taken implementation action.

CPI Associate Director Valerio Micale, who leads the NZFT project, said: 

CPI’s NZFT is the first tool to aggregate, standardize, and assess the progress of financial actors on actions beyond commitments. The platform tracks action across three categories:

Data can be filtered by country and actor type and is also available at the level of individual institutions. This data has been captured, standardized, and assessed from 50 sources, including CDP, PRI, and FinanceMap/InfluenceMap, and ShareAction, offering the most comprehensive net zero coverage of large financial institutions.

For more information, explore the NZFT platform and Methodology.

Climate Policy Initiative is an analysis and advisory organization with deep expertise in finance and policy. Our mission is to help governments, businesses, and financial institutions drive economic growth while addressing climate change. CPI has seven offices worldwide, in Brazil, India, Indonesia, South Africa, the United Kingdom, and the United States.