ISO 14097:2021

Overview

ISO 14097:2021 provides a framework for assessing, measuring, monitoring and reporting investments and financing activities related to climate change. Targeted at financiers (investors and lenders), it defines principles, requirements and guidance to evaluate how financing decisions align with low‑carbon transition pathways, adaptation trajectories and climate goals (including the Paris Agreement). The standard covers both the impact of financiers’ actions on the real economy (mitigation and adaptation) and the climate‑related risks to financial assets (double materiality).

Key topics and technical requirements

• Scope and audience: Applicable to financiers - investors, lenders, asset managers - reporting to shareholders, clients, policymakers, financial supervisors and NGOs.
• Principles: Emphasizes relevance, consistency, completeness, conservativeness, long‑term orientation, transparency, verifiability, accuracy, coherence, and effectiveness among others.
• Risk and opportunity disclosure: Requires identification of short, medium and long‑term climate risks and opportunities and integration into business strategy and financial planning.
• Targets, metrics and methodologies: Guides financiers on setting targets, selecting metrics and tracking progress of investees against low‑carbon transition and adaptation trajectories.
• Impact assessment: Framework for documenting and quantifying outputs, outcomes and impacts attributable to a financier’s climate actions; includes guidance on causality/linkage between financing and real‑world climate effects.
• Monitoring and reporting: Specifies required and recommended information for transparent reporting, record‑keeping and retention.
• Verification: Addresses verification/validation of reported information to support credibility and comparability.
• Asset‑level considerations: Considers risks to a broad range of financial assets (private equity, listed equity, bonds, loans).

Practical applications and users

ISO 14097 is practical for:

• Financial institutions designing or refining climate finance strategies and disclosures.
• Risk teams incorporating climate‑related scenarios and transition risk into portfolios.
• Product teams creating green or transition finance products and conditional lending frameworks.
• ESG and sustainability reporting teams preparing disclosures for regulators, supervisors and investors.
• Asset managers and lenders documenting the impact of stewardship, lending conditions, preferential finance or policy advocacy on mitigation and adaptation.

Benefits include improved alignment with climate goals, clearer target setting, consistent metrics for tracking progress, and stronger evidence for stewardship and investment decisions.

Related standards and frameworks

ISO 14097 complements broader climate and financial disclosure frameworks - for example, the Paris Agreement goals and climate disclosure initiatives - and is intended to be used alongside other ISO guidance on greenhouse gas management and adaptation where appropriate.