In the face of rising concerns over greenwashing, OIC banks have an opportunity to enhance their climate impact by learning from global banks' challenges. While the pace of responsible finance targets has quickened, so has the scrutiny from stakeholders and regulators. An analysis by RepRisk indicates that greenwashing risks for companies have fallen for the first time since 2019, highlighting the evolving landscape financial institutions must navigate. With an increasing emphasis on transparent and actionable climate targets, OIC banks can draw valuable insights from the Transition Pathways Initiative's (TPI) recent report on transition in the banking system, which underscores the importance of comprehensive target-setting and decarbonization planning.

The report sheds light on the pitfalls faced by larger banks, such as overly narrow climate targets and the lack of comprehensive disclosures on capital market activities. As OIC financial institutions and those in Islamic finance aim to decarbonize their portfolios, they must consider sectoral relevance, the materiality of emissions, and the integration of broader metrics like the Energy Supply Financing Ratio. Ultimately, the focus should shift from merely disclosing targets to implementing strategies that drive real-world economic changes, thereby aligning with global efforts to limit warming and promote a Just Transition.