Reaction to the UK government’s announcement that large firms and financial institutions will be forced to show how they intend to reach climate change targets.
Today’s announcement that UK financial institutions and listed companies will be required to publish net zero transition plans has the potential to revolutionise the impact of sustainable finance.
Baringa’s own research shows that up to half of sustainability-linked loans are open to ‘greenwashing’. The current lack of transparency and regulatory guidance undermines the positive intentions of green finance initiatives, opening the door to criticism and accusations of hypocrisy.
To drive sustainable change, the Transition Plan Taskforce’s ‘gold standard’ for transition plans must support the setting of robust standards and guidance. Baringa’s research shows that 80% of companies accessing sustainability-linked loans had not set targets to reduce indirect emissions (referred to as Scope 3), implying that sustainability-linked borrowers aren’t even trying to support net zero goals.
A cultural change in transparency and approach to the challenge of reaching net zero is urgently needed. Baringa’s research shows that 40% of companies accessing major sustainability-linked loans did not disclose how often their boards discussed climate risk, and a further 30% were not incentivising their management towards climate objectives.
Sustainability-linked Finance has a Transparency Problem (baringa.com)
To find out more about how we can help you, please contact us.
Our Experts

Related Insights

What are the opportunities for financial services firms in the US real estate transition?
We cover the current state of real estate decarbonization along with recommendations for how financial services institutions can capitalize on the opportunities inherent in the transition.
Read more
Moving from intent to action: the inflection point for financial services in the climate transition
Net zero targets are set. Strategies are in place. Now, to move from intent to action banks must embed climate into every aspect of business as usual.
Read more
Mid-tiers’ slow and steady ESG strategy - report
Our benchmarking study is designed to show mid-tier banks are progressing on their sustainability agendas and what they can do to speed up.
Read more
Financial Services: navigating your path to net zero opportunities
Baringa are your trusted Net Zero advisor. We are a global leader on energy transition and passionate about supporting you on the journey to protect our planet.
Read more