Background

More than 50 financial institutions have publicly committed to set emissions reduction targets through the Science Based Targets initiative (SBTi). In 2018, the SBTi launched a project to help financial institutions align their lending and investment portfolios with the ambition of the Paris Agreement. The project audience includes universal banks, pension funds, insurance companies and public financial institutions.

World Resources Institute (WRI) is the managing SBTi partner for this project and works closely with WWF and CDP through a project core team.

Financial support is being provided by Caisse de dépôt et placement du Québec (CDPQ), ClimateWorks Foundation, Dutch Platform Carbon Accounting Financials (PCAF), Keeling Curve Prize, Hewlett Foundation, and The Bank of New York Mellon.

While the project is underway, financial institutions are invited to commit to set SBTs by submitting the Commitment Letter. Until the project is completed in Fall 2020, financial institutions may seek a partial validation for their scope 1 and 2 targets. After project completion, they will be able to receive comprehensive assessments for their scope 1, 2, and 3 targets, and announce these targets if approved.

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Timeline

The first phase of the SBTi’s finance project is focused on developing target-setting methods, criteria and guidance for financial institutions to set science-based targets. The methods, which use an asset class-based approach to link financial institutions’ investment and lending portfolios with climate stabilization pathways, were road tested in 2019. The methods, criteria and guidance comprise a framework that will be launched in Fall 2020.

The second phase of the project will include financial institution scope 3 target assessments based on the framework, as well as reporting by financial institutions on the link between targets and emissions reductions in the real economy. 

Tool Beta Test and Draft Guidance

The SBTi is currently developing an open-source temperature scoring and portfolio coverage tool that financial institutions can use to set targets for their investment portfolios. The tool is based on a new open source temperature rating methodology developed by CDP and WWF. The methodology and tool are suitable for setting targets for unlisted and listed equity and corporate debt portfolios.

Join us for a webinar on July 23 at 9:30 a.m. EST to learn about the tool beta testing as well as the first draft of target-setting guidance for the financial sector. Register here.

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Development Process

Science-based target setting resource for financial institutions are being developed through an inclusive, multi-stakeholder process, including consultation with: an Expert Advisory Group (EAG) representing financial institutions, consultants, NGOs, and academic institutions; financial institutions participating in method road testing; and a broader Stakeholder Advisory Group (SAG) which provides input at key milestones in the framework development process.

Here are highlights from the development process so far: 

  • September 2018: First EAG meeting. Read a summary of the discussion.
  • December 2018: EAG meeting to introduce the draft methods and solicit initial feedback.
  • February 2019: EAG meeting to obtain feedback on the road-testing process.
  • April 2019: Launch of methods road-testing process. Watch a recording of the launch webinar and view slides.
  • April-September 2019: Gathered feedback from financial institutions and other stakeholders on draft asset class-based methods through road-testing process and an open stakeholder consultation.
  • October 2019: Hosted a webinar to share a summary of feedback received from companies participating in the road testing process. Watch a recording of the webinar and view slides.
  • November 2019: Co-hosted a webinar with Global Compact Network Australia and WWF to share progress on methodologies with financial institutions in Oceania and Asia Pacific. Watch a recording of the webinar and view slides.
  • February 2020: Hosted workshops in London and Tokyo to gather feedback from stakeholders on draft target validation criteria. Watch a recording of the workshop plenary in London and view slides here.
  • April 2020: Hosted a webinar to initiate public call for feedback on development of a new temperature scoring draft methodology for companies and investment portfolios. Watch a recording and view slides.
  • April – May 2020: Conducted public consultation to gather input from stakeholders on draft target validation criteria and tool development process that will serve as central components of the SBTi’s framework for financial institutions.
  • May 2020: Hosted a webinar to share a summary of stakeholder feedback on draft target validation criteria. Watch a recording and view slides.
  • May 2020: Participated in a webinar hosted by the Institute of International Finance to share a project overview and update. View recording.

Resources

Additional external resources

Contact

Cynthia Cummis, Director of Private Sector Climate Mitigation, WRI, [email protected]

Nate Aden, Senior Fellow, WRI, [email protected]

Chendan Yan, Research Associate, WRI, [email protected]