A new report from Topo Finance, titled 'The Carbon Bankroll 2.0: From Awareness to Action,' reveals that the emissions enabled through corporate financial management are far larger than previously understood. The report builds on the organization's pioneering 'The Carbon Bankroll 1.0' research and underscores the responsibility and opportunity companies have to leverage their finances as a powerful climate action lever.
According to the report, if the largest U.S. banks and asset managers were a country, they would rank as the third-largest emitter globally, behind only China and the U.S. Additionally, the indirect emissions enabled by the $7 trillion that U.S. non-financial companies cumulatively hold in cash and investments represent over an estimated 20% of the nation's total gross emissions. These findings challenge the common practice of treating banking and investing activities as climate-neutral.
'Knowing what I know now, I believe companies' greatest opportunity to catalyze climate progress at a speed and scale that matches the urgency of the climate crisis is by working with their financial partners to decarbonize their banking and investing,' said Patrick Flynn, corporate climate action lead at Topo Finance.
The report highlights that through their lending and investing powers, financial firms will play a critical role in determining the collective climate fate. '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,' said Rebecca Self, Topo's sustainable finance analytics lead.
The report points to climate-conscious companies like Atlassian, Patagonia, and Seventh Generation that are already transforming their financial management into a catalytic climate solution. Topo Finance's leaders expect integrating financial practices into core sustainability work will soon become standard practice industry-wide.
The implications of this report are significant for New York City metro area businesses and nonprofits, many of which hold substantial cash reserves and investments with financial institutions headquartered in the region. The findings suggest that these organizations have a previously unrecognized opportunity to influence climate outcomes by engaging with their banks and asset managers to decarbonize their portfolios. This could lead to a shift in how companies approach their sustainability strategies, moving beyond operational emissions to include financial emissions as a key metric.
