Half of large financial firms have yet to publicly disclose net zero targets, while one third of them would fail the new sustainability disclosure requirements, due to come into force at the end of 2025.
These findings were in a new Net Zero report, published by employer commuting specialists Mobilityways. This surveyed large companies across a number of sectors on their progress towards net zero.
Looking at the financial sector — which includes asset managers, fund managers platforms and advisory groups — a significant proportion would currently fail these new entity-level disclosure requirements, details of which were set out by the FCA last month.
For example over half of these large financial firms (53 per cent) had not ‘publicly stated a target date and year to reach net zero’. Meanwhile, 41 per cent of had not yet incorporated all value-chain Greenhouse Gas (GHG) emissions into their reduction and removal targets — in alignment with the global goal to limit warming to 1.5 Degrees Centigrade above pre-industrial level.
A further 35 per cent of these financial firms said they had failed to establish ‘some or all short- and medium-term milestones to help achieve net zero’.
All investment managers with assets under management of more than £5 billion must provide these new SDR disclosures to the FCA — explaining how they are managing sustainability risks and opportunities, within a detailed annual sustainability entity report – effective from 2 December 2025.
These disclosures are likely to be built on the principles and recommendations laid out in the Task Force on Climate-related Disclosures (TCFD). ISSB, SASB and GRI Standards were also referenced by the FCA as documents to consider when building Sustainability Entity Reports.
Progress by these financial firms in terms of their own Scope 1, 2 and 3 emissions reporting is also patchy — according to the report. It found just over half (57 per cent) had begun implementing Scope 1 and 2 ‘direct’ emissions reporting — even though this sits within TCFD recommendations.
Meanwhile, 71 per cent have started, implementing Scope 3 reporting, which covers indirect emissions suppliers and the customers’ use of any products or services. Of those that had begun Scope 3 reporting, just under half (48 per cent) had fully implemented the Greenhouse Gas Protocol’s Corporate Value (Scope 3) Accounting & Reporting Standard or equivalent.
Just over half (56 per cent) of these financial firms admitted that there were significant gaps in the provision of their organisation’s and suppliers’ environmental performance records — and 59 per cent were very concerned about the ‘lack of standardisation for weighting and measuring emissions performance, especially as regards Scope 3’ reporting.
A third (32 per cent) were unable to compare their own Scope 1 and 2 environmental reporting performance with sector peers, and the same percentage could not check their own emissions reduction performance in one key Scope 3 factor – employee commute emissions.
However, while some financial services companies may not yet be reporting what is necessary for the new SDR rules, Mobilityways says the sector is ahead of a number of other sectors it surveyed – which include the construction industry, healthcare, local authorities and further education.
To compile these results Mobilityways use the market research agency Opinium, which interviewed a representative sample of large firms from each sector. In this case this involved 100 response from the larger asset managers, distributors and wider financial services sector organisations.
Mobilityways managing director Julie Furnell says: “Although the financial services sector has proved to be ahead of some of the sectors we researched for this report, there is clearly no room for complacency, particularly now that the FCA’s SDR has set deadlines for new entity-level sustainability disclosures.
“These new disclosure requirements will be demanded of all regulated firms with over £5 billon AUM by December 2025.
“So, there is no time to waste in setting targets, collecting reliable emissions data and developing solutions to decarbonise areas of their business’s operations. If they cannot get their own house in order in terms or environmental reporting and decarbonisation roadmapping, they will have little credibility when they start promoting new Sustainability Impact or Sustainability Focus labelled funds to institutions or retail investors.”
