This report highlights the increasing importance of finance in the fight against climate change. Private financial institutions have a crucial role to play in the low-carbon transition, and there is a growing trend towards "climate alignment" - the idea that financial institutions should understand the climate impact of their current portfolio and investment strategy and commit to taking steps to align with a <2°C emissions pathway. By the end of 2019, financial institutions representing $17.2 trillion had committed to aligning their portfolios with the temperature goals of the Paris Agreement. However, climate-aligned finance is challenging in practice, as there is no single agreed-upon decarbonization pathway in most sectors.
