2023 Update to the SBTi Financial Institutions Guidance – net zero targets and fossil fuel finance

On the 15th June 2023, the SBTi released three new draft resources relevant to financial institutions (FIs) for public consultation. Note that the SBTi classifies any of the below as an FI and this guidance is therefore aimed at the following types of organisation:

  • Asset managers / owners
  • Retail / commercial banks
  • Insurance companies functioning as an asset managers
  • Mortgage real estate investment trusts
  • Organisations obtaining >5% of annual revenue from investments or the above activities

The update expands upon the currently available near-term guidance for the finance sector to provide an initial outline of the expectations of FIs when setting net-zero carbon targets. These expectations include a specific paper dedicated to addressing fossil fuel finance and the provision of an effective but just transition to a low carbon future.

Focussing on providing a target-setting framework for Scope 3: Category 15 (Investments), the SBTi have compiled, and expanded upon approaches developed by various industry bodies to give greater clarity on addressing this prominent and unique emissions source. The consultation outlines a series of proposed approaches, requesting feedback on the most appropriate methodologies before providing specific insight to the quantitative metrics and target requirements. The documents are therefore an indication of the direction of net-zero target setting in the finance sector and not yet a firm overview of the ambitions that these organisations will need to follow.

The consultation response has now closed and will be deliberated over by the SBTi in the lead up to final publication of the framework in Q1/2 2024.

A team of our net zero strategy consultants have explored the contents of the consultation documents and summarised their findings in a briefing pack which you can download here:

Download the SBTi draft guidance briefing pack

If you have any questions on the SBTi guidance, or more generally on net zero frameworks, please contact Luke Riseborough (Consultant, Aim for Zero).