SBTi Provides Guidance to FIs to Set Net-zero Targets
SBTi (Science Based Targets initiative) has published a new foundations paper offering new concepts for defining and setting net-zero targets for banks, asset owners, asset managers and other financial institutions.
In a statement, SBTi says financial institutions with USD 130 trillion in assets under management are now committed to reaching net-zero emissions before 2050. "However, a science-based approach is needed for them to set consistent net-zero targets with emissions reductions in line with the Paris Agreement and 1.5°C."
The paper provides principles, definitions, metrics, and target formulation considerations – such as the role of fossil fuel financing, climate solutions, and the use of carbon credits – for financial institutions to set quantitative net-zero targets linked with emissions reductions in the real economy.
The paper is intended to facilitate the development of SBTi's Net-Zero Standard for Financial Institutions, which is due to be launched in early 2023 to bring the clarity and scientific basis the financial sector needs to align with net-zero by 2050.
The Standard will be developed through multi-stakeholder consultations, road-testing of methodologies and a robust technical review with a Financial Net-Zero Expert Advisory Group (EAG).
SBTi is calling on financial institutions to engage in the Standard development process and set near-term science-based targets as the first step in achieving net-zero.
So far, there are 19 financial institutions with approved science-based targets aligned with 1.5°C, including the UK's Schroders, Korean bank KB Financial Group, French bank La Banque Postale, and Swedish private equity firm EQT.
As of April 2022, over 50 financial institutions are committed to setting net-zero targets and more than 140 additional financial institutions are committed to setting near-term targets.
Source: Regulation Asia
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