Congress passing the most ambitious climate bill in U.S. history is cause for celebration, which some estimates say can reduce the country’s emissions by as much as 40 percent. But even with this much-needed breakthrough, the U.S., other countries and the private sector have delayed reducing emissions for so long that the door to limit warming to 1.5 degrees Celsius, necessary to avoid the worst impacts of climate change, is still closing. Breaching this goal of the Paris Agreement means more extreme weather events displacing millions of people, costing hundreds of billions of dollars and exacting an unacceptable human toll. The Paris Agreement slipping out of reach is not an excuse to cease action now. Instead, the closing door on 1.5 degrees is a wake-up call to mobilize across the economy and redouble our work. This is especially true of policymakers at every level and the financial sector and will remain true even after adoption of the Inflation Reduction Act (IRA).

As the new IRA law is enacted, a new climate pathway is needed that leads with action and tough choices from the government and private sector, rather than feel-good talking points. The private sector, and especially the banking industry, has begun to set the right targets but is still too heavily invested in activities and industries that are loading more carbon pollution into the atmosphere. The amount of capital finance from banks that gets allocated to fossil fuel projects is a major driver of the globe’s worsening climate predicament. The world’s 60 largest banks have loaned nearly $742 billion to 100 corporations expanding fossil fuel operations in just the last year and a total of $4.6 trillion to fossil fuels since 2015 (the year the Paris Agreement was adopted). Capital expenditures for upstream oil and gas are climbing and evaluation of more than 100 of the largest emitters shows that no companies in their analysis are meeting investor expectations for climate aligned capital allocation.

By foot dragging, society has lost the luxury of enacting a managed transition and must now confront a series of increasingly challenging decisions and trade-offs. Russia’s war on Ukraine should serve as an example of the economic and security damage caused by failing to transition away from fossil fuels quick enough, rather than as an excuse to double down on fossil fuels as some have argued. These trillions of dollars in fossil fuels translates into unjust global politics and climate-warming pollution that is putting the goals of the Paris Agreement out of reach.

Changing the trajectory of billions of dollars in investments will require regulations from policymakers to establish standardized benchmarks for disclosure and correct for market inefficiencies like negative externalities. The Securities and Exchange Commission’s (SEC) proposed climate risk disclosure law, which helps create more transparency on climate risks, is an example of policy that can help mitigate the risks and support capital formation for the transition we need to make. While many banks are on record in support of more transparency and disclosures, particularly in a voluntary context, very few have spoken out in public support of the SEC’s proposed rulemaking and many, in fact, have sought to weaken and delay a final rule. It’s easy to espouse the right sentiment. But we need big financial institutions to do a lot more. This includes explicit support for the Inflation Reduction Act.

How do we move forward? For starters, not all banks are investing in fossil fuels today, and many lenders are increasingly doubling down on the benefits of renewable energy. More banks need to establish transparent net-zero targets in their financing operations. Most importantly, these pledges must be met with transformative action that match the ambition of the pledges and detailed transition plans with short-term benchmarks to measure progress. Banks and financial firms must aggressively use their expertise and political capital to push policymakers for the big and bold policies that we need to decarbonize the economy.