The Evolution of Climate Finance

Embedding sustainability metrics into the finance industry is critical work that launched in earnest just a few years ago. Since then, it has advanced rapidly — driven by individuals and organizations that recognize both the financial industry’s essential role in mitigating climate change and the increasing necessity to protect against climate-related financial risk. Today, “sustainability and climate finance is a fully professionalized and central part of the banking system,” says Amalgamated Bank Chief Sustainability Officer, Ivan Frishberg. 

In 2020, Amalgamated Bank co-led efforts under the United Nations Environment Programme for the Financial Industry to establish consistent, flexible, and rigorous guidelines for target setting, an initiative that eventually became the Net-Zero Banking Alliance (NZBA). In 2021, Amalgamated Bank became the first U.S. bank to set full portfolio targets under the guidelines of the NZBA. Today, the bank’s recently released 2025 Climate Impact Progress Report shows that it is on track or exceeding its absolute emissions targets in three out of four asset classes and has achieved 240% growth in climate solutions lending from 2020 to 2023, 190% of its target. The data demonstrates how a portfolio can be “significantly transitioned in a relatively short period of time while still delivering impressive growth and financial returns,” says Frishberg, who led the work toward Amalgamated Bank’s portfolio-wide target-setting. 

Founder and CEO of 1Planet Advisory consultancy, Simon Messenger, has almost 20 years’ professional and academic experience in climate change, extra-financial reporting, and sustainable finance. Currently Technical Implementation Lead for the NZBA and a Market Engagement Fellow for the International Sustainability Standards Board (ISSB), Messenger has spent his career working with financial institutions, regulators, supervisors, policy makers, corporates, and broader initiatives to accelerate the development of sustainability-related metrics, standards, and frameworks. 

In this Q&A, Frishberg and Messenger discuss the developments in sustainability frameworks they’ve seen and helped shape over the past few years, and why implementing sustainability-related metrics, standards, and frameworks is critical for investors and companies working toward a more stable and resilient economy. 

Why do investors increasingly care about climate-related financial risks — why should they? 
Messenger: Climate change poses a systemic risk to the global economy. By addressing climate-related risks, investors and companies can contribute to a more stable and resilient financial system, which benefits all market participants. Investors are also driven by: 

• Regulatory and policy changes, e.g. increased implementation of climate-related regulations;
• Reputation and consumer demand, e.g. increased demand for sustainable and environmentally responsible business practices;
• Opportunities for innovation, as the transition to a net-zero economy presents unique growth opportunities in certain sectors;
• Broader risk management (both physical and transition risks). 

How does Amalgamated Bank’s work in climate demonstrate that climate solutions investing offers dependable / increased ROI? 
Frishberg: Amalgamated Bank fully embraces the mission of climate, and we’re doing it in a way that ensures we can look our clients, investors, and children in the eyes and be proud of what we have done. As a result of these efforts, we have a bigger, more profitable bank. We have seen our impact grow and diversify alongside our revenue. For climate, there is only one direction this goes, and those that stay true to the mission and the science will do better in the long run. 

What have you seen change in how financial institutions approach climate risk today versus just a few years ago? 
Frishberg: If you go back five years, you could probably count on one hand the number of banks that had climate targets. It was nascent as a field. While there was some general consensus around alignment with the world’s climate objectives (the goals spelled out in the Paris Climate Agreement), there was still a tremendous amount of white space. As a bank that had committed to becoming a Paris-aligned organization, it was daunting. But it was also a great opportunity for us to help define the space and ensure that mission and purpose were at the center of the work. 

Now, sustainability and climate finance is a fully professionalized and central part of the banking system. Across the industry, climate work is deeply tied to the risk management and business teams at the banks, and disclosures are mainstreamed as part of the work of the CFO and Finance teams. There is better data and an entire ecosystem of data providers, technology platforms, and consultancies that are now supporting the industry. It’s a different world than when we first announced we would align with the world’s emissions targets. Back then, almost no one paid attention. Now, everyone takes it for granted that this is what banks across the globe do. 

Simon, have you seen similar changes in the investor space? 
Messenger: Yes. Compared to a few years ago, investors are now taking a more comprehensive and systemic approach to assessing climate risks and opportunities. In the past, they might have concentrated on individual assets, which were easier to evaluate in terms of physical risks like damage from extreme weather. However, investors are increasingly considering broader transition-related risks and opportunities that arise from widespread changes in the economy. 

As Ivan mentioned, this shift is partly due to advancements in methodologies and the availability of more data, but also because of a strategic evolution at C-level of the understanding of the materiality of climate-related topics. This is both in terms of the impact companies have on the environment, and reciprocally how their businesses are and will be affected by changes linked to climate, whether physical or regulatory, for example. More and more companies are now publishing their transition plans, providing investors with valuable information to analyze. 
Despite this progress, there are still some significant technical gaps and banks are continuing to explore how to best account for the unique characteristics of each portfolio while also taking into account these broader systemic changes. 

What do you see banks that are leading on climate risk integration doing differently? 
Messenger: While each bank is unique, a key trend among those that lead on the integration of climate-related risks and opportunities is the embedding of climate considerations into their core strategy. These banks have established strong oversight and governance processes which ensure that climate issues are a central focus. Additionally, they provide appropriate capacity-building support to their staff to not only grasp climate concepts but also to be able to apply this understanding to their everyday decision-making. 

Over the course of Amalgamated Bank’s journey on climate leadership, how have expectations evolved and what have you learned? 
Frishberg: Looking back on all of this change and thinking about what it means for the work going forward, I have four takeaways that I think we can validate through the results in the 2025 Climate Impact Progress Report: 

• A portfolio can be significantly transitioned in a relatively short period of time while still delivering impressive growth and financial returns.
• Data quality is improving and the advancements can easily cloud actual progress against targets or create a mismatch between annual reporting and historical targets.
• Policy in the real economy remains the largest driver of emissions reductions without the leakage that comes from simply shifting portfolios.
• The risks of climate change are growing and systemic and will only be mitigated through the universal application of emission-reduction strategies across sectors of the economy, led by policymakers. 

One of our biggest lessons from this evolution and being in the middle of the change is that working in partnership is central to making durable progress. Whether it is the development of the global standards for carbon accounting in the financial sector or the practice of target setting for the banking sector, we have always sought to work with others and through independent, credible organizations led by the finance sector. 

Now, the industry has standards and guidelines that are durable, useful, and will keep evolving as the work progresses. That obviously benefits Amalgamated but we think the impact is so much greater when it’s the whole industry moving together. 

Ivan Frishberg is the Chief Sustainability Officer at Amalgamated Bank where he leads impact and shareholder engagement programs. As a commercial banker, Ivan has been instrumental in rallying bank sector commitments to combat climate change, including growing the Partnership 
for Carbon Accounting Financials (PCAF) to $50 trillion in assets committed to measurement and disclosure of financed emissions. Under Ivan’s leadership, Amalgamated has taken a global leadership role within (UNEP FI) in developing guidance for how banks will set targets to reduce their financed emissions through the recently launched Net Zero Banking Alliance. Ivan is on the Steering Group of the NZBA and the Advisory Panel for the Glasgow Finance Alliance for Net Zero. Ivan also steered the way to make Amalgamated Bank the first U.S. bank to commit to the Science Based Targets Initiative (SBTi) and the first bank to set portfolio wide targets under the United Nations guidelines for target setting. 
 

Simon Messenger is the Founder and CEO of 1Planet Advisory. He has held a number of senior roles in the field and was previously Director at the 2 Degrees Investing Initiative, Managing Director at the Climate Disclosure Standards Boards (CDSB), and senior advisor to the Sustainability Accounting Standards Board (SASB). 
In his current roles as Technical Implementation Lead for the Net Zero Banking Alliance (NZBA) and a Market Engagement Fellow for the International Sustainability Standards Board (ISSB), Messenger works closely with NGOs and wider civil society on the implementation of global sustainability goals. 
He has almost 20 years’ professional and academic experience in climate change, sustainability reporting, and sustainable finance. In his career, he has worked closely with a large selection of financial institutions, regulators, supervisors, policy makers, corporates and broader initiatives to accelerate the development of sustainability-related metrics, standards and frameworks.   

The opinions expressed herein are those of the interviewees and do not necessarily reflect the views of Amalgamated Bank.