The Role of Financial Institutions in Net-Zero Transition: Building a Knowledge Map for Climate Transition Assessment

With the trend of the net-zero transition, the financial industry plays a critical role in providing capital and accelerating the global transition to net-zero. However, the transition is a gradual process. This study proposes a framework for climate transition assessment called "Net-Zero Transition Knowledge Map". The framework provides financial institutions with a reference for evaluating corporate net-zero transition performance, supports net-zero strategy implementation, and drives economic transition.

The construction of the knowledge map involves identifying and mapping knowledge requirements to provide a suitable process for analyzing and presenting. Integrating industry characteristics on climate, this study analyses corporate transition performance by collecting and systematically evaluating indexes of climate transition.

The proposed framework integrates quantitative and qualitative analysis from the industry level to individual enterprises through four key steps: first, identifying industry characteristics by analyzing the type of industries, with a focus on restrictive or sensitive sectors on climate, and conducting value chain analysis to assess involvement in high-carbon activities or potential transition technologies. Second, comprehensive indicators should be collected to establish clear data sources and foundations for assessment. Third, establish benchmarks through general and industry-specific metrics. Finally, assess corporate transition maturity by evaluating current performance and future transition plans.

This study contributes a practical assessment model by integrating corporate climate goals and industry-specific net-zero transition characteristics on a science-based. It provides strategy references for financial institutions and offers strong support for promoting economic systems toward a net-zero transition.

Keywords: transition finance, climate risk assessment, knowledge map