SBTi launched the Financial Institutions Net-Zero Standard

The Financial Institutions Net-Zero Standard ("Standard") provides financial institutions with a structured approach to set alignment and sector-specific targets that are consistent with the goal of reaching net-zero by 2050.

It is designed primarily for financial institutions - the SBTi defines those as entities that generate 5% or more of their revenue from any of the following five financial activities: Lending, Asset Owner Investing, Asset Manager Investing, Insurance Underwriting, and  Capital Market Activities.

Key Takeaways for Boards

The Standard offers practical guidance on how to embed climate considerations into governance, target-setting, and accountability structures, ensuring that commitments translate into measurable impact.

The Standard identifies five critical outcomes where financial institutions can exert the greatest influence on driving real economy change:

1. Robust climate governance driven by a clear set of public commitments
2. Comprehensive assessment of climate impacts driven by clear accounting
3. Alignment of relevant financial activities with global climate goals through the development of policies and ambitious targets
4. Continuous progress is incentivized by transparent disclosure
5. Financial institutions make clear and credible claims

Key Elements of the Standard

• Support of financial institutions in their crucial role in the global net-zero transition.
• At its core is an “engagement-first” approach - portfolio companies are encouraged to set their own science-based targets as the primary means of reducing emissions.
• Institutions are expected to improve the quality and scope of emissions and non-emissions data.
• Where significant deforestation risks are identified, an engagement plan must be in place no later than the target renewal date.
• The fossil fuel transition policy requires institutions to commit to ending coal expansion finance, halting project finance for new oil and gas, and phasing out general-purpose oil and gas financing immediately or by 2030.
• The buildings policy recommends withholding finance for new buildings that are not zero-carbon-ready, while increasing investment in retrofitting existing buildings.
• Near-term targets focus on enabling portfolio company transitions, scaling finance for climate solutions, and aligning with key sectoral benchmarks.
• Long-term targets require counterparties to achieve net-zero by 2050 and address residual emissions as appropriate.
• There is a requirement for progress assessment and target renewal at the end of each near-term target cycle.