Almost 40 financial institutions have publicly committed to set emissions reduction targets through the Science Based Targets initiative (SBTi) and an additional 70 reported to CDP in 2017 that they intend to set a science-based target within the next two years.
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 current phase is focused on developing target-setting methods and a framework for financial institutions to set science-based targets. The project audience includes universal banks, pension funds, insurance companies and public financial institutions.
Stakeholder Consultation and Road Testing Draft Asset-Class-Based Methods
The SBTi is using an asset-class-based approach to link financial institutions’ investment and lending portfolios with climate stabilization pathways. From April to July 2019, we are gathering feedback from financial institutions and other stakeholders on draft asset-class-based methods through a road-testing process and open stakeholder consultation.
WRI is the managing SBTi partner for this project, with Navigant and the 2° Investing Initiative providing technical support on method development. The target-setting methods and framework 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 and method road testing with financial institutions.
After road testing is completed, we will develop target validation criteria for financial institutions to set SBTs, followed by a public consultation process. The final methods and criteria documents are planned for launch next year.
Milestones from the guidance development process:
We convened the first meeting of the Expert Advisory Group in September 2018. Read a summary of the discussion.
The second EAG meeting was held in December 2018 to introduce the draft methods and solicit initial feedback.
The third meeting was held in February 2019 to get feedback on the road-testing process.
What Action Can Financial Institutions Take While This Project is Underway?
Financial institutions are invited to commit to set SBTs by submitting a Commitment Letter for Financial Institutions. Your company will be recognised as “committed” on sciencebasedtargets.org as well as on our partners’ websites at We Mean Business and CDP. Companies participating in the UN Global Compact will also be recognized on their website. However, while financial institutions can get a preliminary validation for their scope 1 and 2 targets, they are not expected to submit scope 3 targets to the SBTi until sector-specific methods for assessing impacts against a well- below -2°C or 1.5°C emissions trajectory are available.
Cynthia Cummis, Director of Private Sector Climate Mitigation, World Resources Institute, [email protected].