Institutional Investors Group on Climate Change (IIGCC) said banks should set tougher Environmental, Social and Governance (ESG) standards to boost their decarbonisation efforts.
The group, which manages US$11 trillion in assets, includes Pimco, the world's largest bond investor, and Britain's main asset manager, Legal & General Investment Management – part of Legal & General PLC (LON:LGEN).
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Several banks have pledged to go net-zero by 2050 but have not outlined specific plans, while continuing to fund fossil fuels and other heavily polluting projects.
"The problem we face today is that too many banks are failing to consider climate harm when they make financing decisions, and too much money is being ploughed into carbon-intensive activities that we so desperately need to move away from," Natasha Landell-Mills, Head of Stewardship at Sarasin & Partners, was reported as saying by Reuters.
IICG said banks should link bonuses to decarbonisation targets while climate risk should be included in their earnings reports.