The City of London has published a report analysing climate related actions taken by financial services firms in the UK and other major global centres.
The report found there are more financial services firms committed to science-based targets, high levels of private sector green bond issuance, and inclusion of climate considerations in decision-making processes.
The report focuses on three key parts that show the extent to which firms are taking action on climate change.
Targets is one measure, which is the extent to which financial services firms are setting targets to achieve net zero.
These targets inform businesses how much and how quickly they need to reduce their greenhouse gas emissions to avoid the worst effects of climate change.
Implementation is the next, which looks at whether firms are incorporating climate considerations into their decision-making processes.
Lastly, there is finance, which is whether investment flows are targeting climate solutions.
The report revealed that in 2024, the UK had the highest number of financial services firms committed to or adopting science-based targets (60 firms).
Over the past year, the UK was also saw the largest increase in the number of firms setting a science-based target or committing to do so (15 additional firms, followed by France with 6).
It accounted for half of the growth seen across all financial centres covered in the analysis between 2023 and 2024.
The City of London said despite a challenging environment for the net zero transition, the number of financial service firms setting targets aligned with the Paris Agreement continued to rise in 2024, albeit from a low base.
The UK was also ahead of other European centres on the use of climate scenario analysis to inform climate risk management — with two-thirds (48 of the largest UK firms out of 73 in Europe) reporting using this.
It also saw the largest increase between 2022/23 and 2023/24, with 10 additional firms, compared to three in France.
“This signals a growing commitment to embedding climate risk into core business planning, with climate scenario analysis a key tool for building credible, net zero-aligned strategies,” the report said.
“The consideration of climate-related risks and opportunities in decision-making processes follows the Task Force on Climate-Related Financial Disclosures (TCFD) recommendations.
“The UK’s lead in this area can be partly explained by its early mandating of publicly quoted companies, large private companies, and LLPs to make disclosures aligned with the TCFD.”
The analysis focuses on six countries with large global financial centres: UK, US, France, Germany, Hong Kong and Japan.
Elsewhere, the report outlined that in 2023/24, 77 of the largest financial services firms across the UK, France, and Germany had reported on how climate-related risks and opportunities were shaping their businesses, strategy, and financial planning.
The UK was ahead of its European peers on this metric, accounting for 54 or 70 per cent of these firms, followed by France with 15 firms.
The number of financial services firms reporting on this has been steadily rising over the last two financial years, largely driven by the UK, followed by France.
The City of London said this reflects growing awareness among financial services firms that resilience and competitiveness in the low-carbon economy require climate risks and opportunities to be actively managed.
Chris Hayward, policy chair at the City of London Corporation, said: “Achieving net zero is not just an environmental imperative — it is a strategic economic opportunity.
“By financing this transition, supporting innovation, and embedding climate considerations into strategy, the UK financial services sector can drive growth and further strengthen the UK’s global leadership in sustainable finance.
“And while increasing finance for green projects is necessary to achieve net zero, so too is ensuring the transition of hard-to-abate sectors.
“At stake is a more dynamic, competitive, and resilient economy. This is why, together with HM Government, we co-launched the Transition Finance Council, with the aim to position the UK as the world’s premier destination for raising transition capital with integrity.”
sonia.rach@ft.com
