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Shaping a role for the private financial sector to proactively support global decarbonization.
Climate alignment is the process of aligning lending and investment decisions with a downward glide path toward long-term decarbonization targets.
Expectations about the financial sector’s role in shaping a sustainable planet have evolved rapidly and have now converged on the notion of climate alignment. As climate alignment cements itself as an enduring feature of the financial landscape, financial institutions will increasingly be expected to accelerate the decarbonization of their portfolios through rapidly scaling up green investment while also supporting the transition of carbon-intensive industries, clients, and assets.
There is an urgent need to decarbonize the global economy to align with scientific evidence, and there is a growing momentum among policymakers, regulators, and business leaders to drive an accelerated pace of change. The private financial sector, working in partnership with corporate clients across the real economy, can and should play an active role in achieving accelerated decarbonization.
As climate alignment rapidly becomes a global norm in the private financial sector, RMI is working to ensure that the frameworks, tools, and agreements are in place to enable financial institutions to support decarbonization as they transition their own portfolios toward climate alignment.
RMI pioneered the Poseidon Principles, the first global, sectoral climate alignment agreement for financial institutions. This agreement covers more than $100 billion of senior maritime shipping debt. Its design enables banks to continue doing business while also supporting the decarbonization of the shipping sector, which represents 2%–3% of global emissions.
RMI also worked closely with large private finance institutions to contribute to the Climate Finance Leadership Initiative’s report. The report, which provides the first private sector perspective on mobilizing finance for the low-carbon transition, profiles the challenges and opportunities of climate alignment.
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