ISO 14097: A new standard for assessing and reporting green finance activities

It is estimated that trillions of dollars of investment are needed in order to meet global net-zero carbon goals.

Green finance will be critical to meet these goals, but comprehensive and comparable assessments and reporting are essential to have any positive impact on the environment and attract further investment. It is also increasingly a regulatory requirement. In May 2021, following several years’ work of work, ISO (International Standards Organization) Standard 14097 was published in order to help. It was initially proposed by the French national standardization body, AFNOR, and approved by ballot in January 2017.

ISO 14097, Greenhouse gas management and related activities – Framework including principles and requirements for assessing and reporting investments and financing activities related to climate change, helps financiers assess and report on their actions and see the real value of their contribution to climate goals.

The framework outlined in the standard specifies the principles, requirements and guidance needed. It is built around the “theory of change” approach, which aims to define what is needed for a long-term impact. ISO 14097 covers the effects of investment decisions on GHG emissions trends in the real economy, the compatibility of investment and financing decisions with low-carbon transition pathways and climate goals, and the risk on financial value for owners of financial assets (e.g. private equities, listed stocks, bonds, loans) arising from climate goals or climate policies.

2DII contributed to the development of ISO 14097, working closely with AFNOR and other expert group members over the past four years.

Funder information: This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 785087. It has also received funding from the International Climate Initiative (IKI). The Federal Ministry for the Environment, Nature Conservation and Nuclear Safety (BMU) supports this initiative on the basis of a decision adopted by the German Bundestag.