Energy Efficiency, GHG Emissions - April 15, 2022
Science Based Targets To Publish Net Zero Goals Paper
The Science Based Targets initiative (SBTi), the global body enabling businesses to set emissions reduction targets in line with climate science, is publishing a Net-Zero Foundations for Financial Institutions paper that provides new concepts for defining and setting net-zero targets for banks, asset owners, asset managers and other financial institutions.
Financial institutions with US$130 trillion in assets under management are now committed to reaching net zero emissions before 2050. 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 Foundations’ paper paves the way for the 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 sector needs to align with net zero by 2050.
The paper addresses key issues for financial institutions; specifically, a standard definition for net zero, the use of offsets and carbon credits, and fossil fuel phase-out approaches. The Standard development process will incorporate the latest climate science and methodologies to drive change in the real economy and deliver solutions.
“Financial institutions are critical players in driving real-economy emissions reductions through investments and lending activities,” said Dr. Luiz Fernando do Amaral, SBTi CEO, in a statement. “There are signs the sector is embracing this responsibility. Immediate action is already possible for short term science-based targets. However, when it comes to net zero, there is little understanding of what it means for the finance industry. Our paper provides the clarity that has been desperately needed and will enable us to develop a Net-Zero Standard for Financial Institutions that will help net-zero pledges deliver science-based action.”
The 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. Over the next year, the SBTi will develop a Net-Zero Standard for Financial Institutions through multi-stakeholder consultations, road-testing of methodologies and a robust technical review with a Financial Net-Zero Expert Advisory Group (EAG).
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.
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