Major banks around the world are lagging behind in implementing climate-friendly measures

A Large Language Model ranking developed by Climate X and Climate Proof recently revealed that only seven out of the top 50 global banks have implemented appropriate measures to climate-proof their operations and those of the businesses they finance. According to the AI, the majority of banks have been lagging behind in achieving this goal.

Banks Are Failing To Climate-Proof Their Operations

For years now, there has been a growing awareness of climate adaptation, with even financial institutions being required to upgrade their technology and climate-proof their operations. However, the ranking reveals that the banks have mostly failed to make notable progress in this regard.

As mentioned, only seen out of the world’s top 50 banks are meeting more than half of the climate adaptation criteria, while not a single one of them met all.

The study also found that the European and UK banks generally performed better than the ones from Canada, the US, or Australia, likely because they operate in regions with stricter climate policies and frameworks.

The top-performing banks according to this metric include Standard Chartered, Banco Santander, and UniCredit bank. All three of them have demonstrated advanced engagement with special strategies developed to achieve climate adaptation. Meanwhile, US-based banks such as Morgan Stanley, Capital One, Goldman Sachs, and US Bank found themselves at the bottom of the rankings.

Climate Adaptation Is No Longer A Choice, Says Climate X CEO

Commenting on the results of the research, Climate X’s CEO, Lukky Ahmed, stated that climate adaptation is not a choice for the financial sector anymore. It is a necessity, and the AI ranking demonstrates that some banks have started taking steps to prepare for a hotter and more volatile world. But, at the same time, the research reveals that the large majority still has a long way to go.

“It is vital that banks incorporate adaptation into their strategic decision-making processes and develop products and services that support resilience,” Ahmed added.

The ranking was conducted using a specially designed methodology meant to evaluate the banks’ adaptation maturity. It measured their success at meeting the climate requirements through 17 qualitative indicators.

Climate X analyzed the most recent public disclosures from each institution as part of assessing their levels of preparedness, primarily focusing on their annual reports. It then used a Large Language Model to determine how well each of the banks aligned with the indicators.

Kamil Kluza, the COO of Climate X, stated that the methodology gives a comprehensive picture of how the banks are progressing in their adaptation efforts. “However, it also reveals significant gaps in transparency and action. Most banks are not setting adaptation impact metrics, and few have clear lending strategies that support communities and businesses hit by climate-related disasters,” Kluza warned.