Can climate rules become banks' next business?

Many businesses still lack reliable emission data.

Climate rules are creating opportunities for banks to expand into advisory services and transition planning as companies seek help meeting increasingly complex sustainability requirements.

“However, regulators particularly in Europe have sharpened their focus on the credibility of banks’ transition plans,” McKinsey & Co. said in a June report.

Global efforts to require banks to adopt net-zero disclosures and transition plans lost momentum after the Net-Zero Banking Alliance dissolved in 2025 following the withdrawal of major banks.

McKinsey said this does not mean financial institutions are free from climate-related obligations.

Governments continue to introduce regulations covering financed emissions, whilst banks face transition risks such as carbon taxes and regulatory penalties.

“The emphasis has shifted from disclosure alone to demonstrating how banks can establish credible pathways to achieve emission reduction targets,” McKinsey said.

The consulting firm said many banks still struggle to measure financed emissions because many of their customers, particularly small and medium enterprises, lack reliable and consistent emission data.

Rather than treating this as a constraint, banks can turn it into a commercial opportunity by helping clients develop climate strategies, McKinsey said.

Some banks are already preparing customised 10-year transition plans for clients and expanding advisory services to identify decarbonisation opportunities, estimate investment requirements, and assess potential returns.

Financial institutions can also structure loans and other financing products that link funding to climate targets, it added.

A survey of 1,050 organisations conducted by the Hong Kong Academy of Finance between December 2025 and January 2026 found that 60% are interested in exploring or are already using transition finance.

Questions to ponder

• How can banks turn climate compliance into a sustainable source of revenue beyond green lending?
• What role should banks play in helping clients measure and reduce financed emissions?
• Will demand for transition finance continue to grow even as global net-zero alliances lose momentum?