Are Financial Institutions Failing To Back The Low-Carbon Economy?

InnovationSustainabilityAre Financial Institutions Failing To Back The Low-Carbon Economy?ByJamie Hailstone,Contributor.Forbes contributors publish independent expert analyses and insights. Jamie Hailstone is a U.K-based reporter, who covers sustainability. Follow AuthorMay 21, 2026, 04:59am EDT--:-- / --:--This voice experience is generated by AI. Learn more.This voice experience is generated by AI. Learn more.PALM SPRINGS, CALIFORNIA - MARCH 06: Wind turbines operate at a wind farm near solar panels on March 06, 2024 near Palm Springs, California. (Photo by Mario Tama/Getty Images)Getty ImagesOnly two of 400 major financial institutions around the world have credible commitments to phase out fossil fuels, according to a new analysis.The report by the World Benchmarking Alliance (WBA) also found just one third of the 400 assessed financial institutions are setting metrics and targets or embedding transition plans within governance structures. Among the institutions with transition plans, around a quarter were found to have embedded one or more short‑term climate solutions financing targets that jointly align with the pathway. The report also found noticeable regional variations, with Europe and Central Asia having the highest share (60%) of financial institutions with transition plans which cover financial activities.While North America has the lowest prevalence of transition plans among the regions highlighted (18%). “Transition plans are emerging as a critical tool for aligning the financial system with climate objectives,” the report states. It adds in order to be credible and drive effective capital re-allocation, transition plans need to include ambitious targets and lay out a clear commitment phasing out the financing of fossil fuel activity. “The global financial system is beginning to build the architecture for transition planning, but capital allocation and fossil fuel phase-out remain far behind what is required for an orderly and resilient economic trans...