To align global finance with a net-zero economy by 2050, financial institutions (FIs) must make informed capital allocation decisions, but current emissions metrics fall short. Financed emissions, the primary tool used by FIs to measure climate impact, provide important accountability but fail to capture the full picture. These metrics overlook key transition drivers, such as enabling technologies and clients’ transition readiness, limiting their utility in identifying and supporting climate-aligned opportunities.

While complementary metrics and some forward-looking emissions metrics offer broader insights, they pose challenges around complexity, transparency, and comparability. This report explores these trade-offs and presents a pragmatic path forward: continue using financed emissions for portfolio-level tracking, but pair them with simpler, actionable indicators, such as production- or finance-based metrics, and robust corporate transition assessments. By shifting toward practical, transparent tools, FIs can better assess transition potential and drive the investments needed to build a net-zero future.