The energy supply financing ratio is a key indicator that synthesizes two major challenges in limiting global warming to 1.5\u00b0C: the phase-out of fossil fuels and the development of sustainable alternatives. To adopt a credible climate strategy, banks must now incorporate this ratio and align their energy financing with the needs of the transition. Now assessed through a dedicated criterion in the <\/b>Sustainable Power Policy Tracker<\/b><\/a><\/span>, the analysis of this ratio has a simple goal: to ensure that banks commit to supporting the decarbonization of electricity through their financing activities.<\/b><\/p>\n<\/div> According to projections by the International Energy Agency (IEA), global electricity production must be fully decarbonized by 2040 to limit global warming to 1.5\u00b0C. Restricting financing for fossil fuels is a crucial first step toward achieving this goal, but it is not enough. A complete transformation of the energy system also requires a massive increase in financing for sustainable alternatives. These investments must replace fossil fuel financing, not add to it.<\/p>\n In concrete terms, by 2030, for every dollar invested annually in fossil fuels, six dollars must be invested in sustainable energy<\/a><\/span> supply (1) \u2013 primarily in electricity. This translates to a 6:1 ratio<\/a>.<\/p>\n<\/div> Since 2023, the IEA has highlighted the importance of financing ratios in its reports to illustrate the necessary investments to follow the trajectory of its \u00ab\u00a0Net Zero Emissions by 2050\u00a0\u00bb (NZE) scenario (2) Moreover, the Science Based Targets initiative (SBTi) recommends that financial actors increase their annual ratios to meet the IEA\u2019s 2030 target. (3)<\/p>\n Bloomberg New Energy Finance (BNEF) has also emphasized the importance of banks’ energy sector financing ratios in a comprehensive study. (4) More recently, the World Resources Institute integrated this ratio into its \u201cNet Zero Tracker\u201d for financial institutions, evaluating \u201cgreen\u201d financing in relation to fossil fuel financing. (5) Meanwhile, the Institute of International Finance (6) and the Institut de la Finance Durable (7) have highlighted it in their publications, further reinforcing its relevance.<\/p>\n Banks themselves are beginning to adopt this ratio. Following agreements with the New York City pension fund and the NYC Comptroller, Royal Bank of Canada, Citi, and JPMorgan have committed to publishing their \u00ab\u00a0clean to fossil\u00a0\u00bb ratio by 2025. (8) Additionally, BNP Paribas has already published its ratio for 2023 and set a ratio target to be achieved by 2030. (9)<\/p>\n However, it is essential to adopt a rigorous methodology to prevent this ratio from becoming a greenwashing tool. While current methodological approaches, like BNP Paribas\u2019s, have their limitations, they confirm that the energy financing ratio is a crucial indicator for any bank seeking to develop a coherent climate strategy.<\/p>\n<\/div>A widely recognized key indicator<\/h2><\/span>