Empowering financial institutions to navigate the green transition

Empowering financial institutions to navigate the green transition
  • Case Study
  • 3 minute read
  • August 01, 2025

Over the last 50 years, the occurrence of extreme weather events has increased 5x due to global warming and climate change. According to Munich Re, economic loss from natural and man-made catastrophes in 2024 reached $460 billion, replacing 2023 as the hottest year to date. Scaling up climate-aligned finance and investment is critical to tackle global emissions, build climate resilience, and keep the 1.5°C temperature goal within reach. To achieve these objectives, an annual investment of at least USD 5 trillion will be required by 2030 – or a 20% year-on-year increase.

Banks and development finance institutions play a critical role in this context, channelling capital towards sustainable outcomes. Through their lending and investment activities, banks influence market behaviour and set standards. This is not only a regulatory requirement but a strategic imperative, as climate-related risks and opportunities become central to financial institutions and a key component of their decision-making.

However, their ability to deploy green finance at scale depends on their capacity to originate, structure, and deploy green finance in a way that is both technically sound and commercially viable. Multilateral Development Banks (MDBs) have developed a joint framework for assessing and reporting on finance directed towards climate-related activities, aiming at ensuring consistency and transparency in how MDBs track and report their climate finance contributions, in line with the goals of the Paris Agreement.

Despite growing momentum and interest, banks, and in particular medium-size financial institutions, face persistent barriers:

Definitions of green finance vary across jurisdictions and institutions, complicating alignment and comparability across jurisdictions. Different banks, countries, and sectors have different criteria, with some being more developed than others. This lack of uniformity hinders investment processes, generates greenwashing risks and poses challenges for future standardisation. 

Banks face a persistent challenge of properly identifying green operations, as loan officers often lack the skills and tools to identify and assess green finance projects in a standardised manner, or to advise clients on the benefits of climate investments or materials used. This involves not only increasing financing for green investments but also identifying green components within traditionally grey investments (e.g. climate adaptation for infrastructure projects).

Banks also need to develop financial instruments and blended solutions that address the specific needs of these types of green investments. This includes creating tailored products, advice to clients on how to green their operations or reduce their emissions, and support for the identification and access to public subsidies and other support programmes that could co-finance their operations.

Monitoring and reporting green investments have historically been seen as cumbersome and resource‑intensive. The complexity of data collection and verification increases costs for both banks and clients, particularly for smaller projects, limiting the scalability and attractiveness of green finance. 

The lack of harmonised definitions and methodologies continues to be one of the most significant barriers to scaling green finance. Institutions need clarity on what qualifies as green, but also simple tools to operationalise that understanding across the organisation, from the sustainability teams at HQ to the smallest branch.

Lucas Novelle AraújoDirector, PwC Luxembourg

How is PwC helping financial institutions green their finance portfolios?

Design the right products

We support financial institutions in designing and structuring green financial instruments that are aligned with regulatory frameworks and market expectations. This includes green credit lines, sustainability-linked loans, and blended finance structures. Our work ensures that products are technically robust, commercially viable, and integrated into the institution’s broader strategy.

Equip institutions with useful tools

We develop methodologies, processes and tools to support the end-to-end lifecycle of green investments. This includes frameworks for identification, assessment, appraisal, monitoring, and reporting. We help institutions isolate green components within mixed-use investments and integrate climate adaptation and resilience considerations into infrastructure finance. Our tools are aligned with EU Taxonomy, CSRD, and other relevant standards, ensuring consistency and credibility.

Build long-lasting capacity for transformational change

We deliver targeted training and institutional capacity-building programmes to embed sustainable finance practices across the organisation. This includes equipping credit, risk, and origination teams with the skills and tools needed to operationalise green finance strategies. Our programmes are designed to create lasting institutional change, ensuring that sustainability is embedded in day-to-day decision-making.


By combining financial expertise, practical know-how, and institutional capacity building, financial institutions can move from ambition to execution, enabling green finance at scale with precision, simplicity and impact.

Our role is to translate complex regulatory and technical requirements into practical, scalable solutions. By equipping institutions with the right tools and capabilities, we enable them to lead – not follow – in the transition to a sustainable economy and benefit from the market opportunities arising from a climate alignment.

Christophe MazandManaging Director, PwC Luxembourg

Contact us

Philippe Pierre

Advisory Partner, Government & Public Services Leader, EU institutions Leader, PwC Luxembourg

Tel: +352 49 48 48 4313

Christophe Mazand

Advisory Managing Director, Government & Public Services, PwC Luxembourg

Tel: +352 621 334 179

Lucas Novelle Araújo

Advisory Director, Government & Public Services, PwC Luxembourg

Tel: +352 621 333 651

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