Finance & Investment Organizational Governance

New Report Helps Companies Stop Bankrolling Climate Change

'Carbon Bankroll 2.0' illuminates the huge, untapped climate impact of the US ﬁnancial system — how it is undermining leading companies’ climate action, and why companies’ ﬁnancial management may be their greatest lever for climate progress.

Published 8 months ago | About a 5 minute read

Image: ZaetaFlow Sec

Companies have historically thought of their banking and investing as a climate-neutral activity, but as Topo Finance’s new report reveals, their ﬁnancial management may be both their largest source of emissions and their most powerful lever for climate action.

The Carbon Bankroll 2.0: From Awareness to Action, which builds on the illuminating research published in 2022’s The Carbon Bankroll 1.0, reveals that these overlooked emissions are larger and more ubiquitous than previously reported. As a result, companies have an even greater responsibility and opportunity to leverage their ﬁnancial management to drive exponential emissions reduction.

“Since we published Carbon Bankroll 1.0, a growing wave of companies and institutions have made their ﬁnancial management a cornerstone of their sustainability work and are driving real impact,” said Topo Executive Director Paul Moinester and Sustainable Finance Initiatives Lead James Vaccaro, who co-wrote both reports. “As organizations start taking action, it will be those banks aligning with climate goals that will be the ﬁnance partners for a sustainable future — whereas those not making the necessary change will see themselves left behind by their customers.”

Launched in 2018 as The Outdoor Policy Outfit (TOPO), a think tank focused on galvanizing the outdoor community into a united movement that could mitigate climate change and create a more just world, the organization evolved its mission and rebranded in late 2023 as Topo Finance — a nonproﬁt dedicated to transforming the ﬁnancial sector into a powerful force for creating a more just, regenerative world — which conducts research and develops pragmatic solutions that enable all organizations and individuals to maximize the positive impact of their ﬁnances.

As corporate sustainability commitments have become table stakes and companies gain more and more control over their supply chains, awareness is finally growing around the disconnect between these commitments and a company’s actual impacts — thanks to a historic opacity around the impact that corporate cash has on supporting the fossil fuel industry, which undermines sustainability efforts by continuing to fuel climate change. In recent years, more effort is being made to follow corporate investment money paid to insurance and employee 401(k) and pension funds, to see where well-meaning investments may be having the opposite effect.

Treasurers regularly engage with their financial partners to conduct due diligence and ensure their money is safely deposited with a secure and reliable financial institution. As Topo Finance points out, this work is just a different frame on this fundamental engagement practice.

“As this report shows, through their lending and investing powers, ﬁnancial ﬁrms will play a critical role in determining our collective climate fate,” said Rebecca Self, Topo’s sustainable ﬁnance analytics lead, former CFO of sustainable ﬁnance at HSBC and co-author of the report. “By helping businesses understand how ﬁnancial ﬁrms are channeling their money toward a carbon-intensive future, we aim to help companies understand why they need to work with their ﬁnancial ﬁrms to decarbonize their ﬁnances and rapidly shift investments away from climate drivers and into climate solutions at scale.”

Produced by Topo Finance in partnership with BankFWD, the Climate Safe Lending Network, Exponential Roadmap Initiative, Futerra, Pure Strategies and the World Business Council for Sustainable Development, The Carbon Bankroll 2.0 features critical insights, including:

If the largest banks and asset managers in the US were a country, they would be the

third-largest carbon-emitting country in the world, behind China and the US.
Nonﬁnancial companies in the US cumulatively hold about $7 trillion in cash and investments, and the total indirect emissions enabled by this money represents more than an estimated 20 percent of the country’s total gross emissions.
For many of the world’s most climate-conscious companies, the emissions stemming from their cash and investments likely either represent their largest source of emissions or are larger than all their other emissions combined.

In addition to its ﬁndings, the report also provides guidance on how to embrace this new climate power, and it highlights the work companies such as Atlassian, Patagonia and Seventh Generation are doing to transform their ﬁnancial management into a catalytic climate lever.

“Just when you think you’ve got all your sustainability focus areas humming along nicely, you read The Carbon Bankroll report,” says Jessica Hyman, Chief Sustainability Officer at Atlassian. “That was our team last year when we learned how many tech companies’ financial assets are contributing to emissions that exceed the company’s scope 1-3 emissions combined — talk about a wake-up call. This realization led Atlassian to examine our own financial supply chain, and we collaborated with the finance team to ensure we were taking a long-term view. For example, we no longer use investment vehicles involving companies that get more than 10 percent of revenue from fossil fuel extraction or development. We’re aiming for better ROI for the company and the climate. This is just the start, and there’s more we can do.”

“I thought Seventh Generation was doing everything we possibly could to act on climate. I was wrong. I had overlooked one of our greatest climate powers — our finances,” says Ashley Orgain, Chief Impact Officer at Seventh Generation – which in 2022 launched its Climate Fingerprints Framework to comprehensively measure the climate impact of its corporate investments. “With Topo Finance’s help, we have quantified the role cash and investments have on our carbon footprint. The analysis and the insights have transformed our strategy and set Seventh Generation on a course of action. We’ve published our findings, and by utilizing guidance from The Carbon Bankroll report, we have developed a multipart plan to work with our parent company and built a coalition of like-minded businesses to tackle these hidden emissions. Join us!”