Background

More than 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 (SBT) 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 project audience includes universal banks, pension funds, insurance companies and public financial institutions.

World Resources Institute (WRI) is the managing SBTi partner, with Navigant and the 2° Investing Initiative providing technical support on method development.

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

While the project is underway, financial institutions are invited to commit to set SBTs by submitting a Commitment Letter for Financial Institutions. While they can seek a preliminary validation for scope 1 and 2 targets, it is recommended that financial institution submit targets after sector-specific methods for their investment and lending activities become available to receive comprehensive assessments.

Timeline

The project is currently focused on developing target-setting methods and a framework for financial institutions to set science-based targets. The draft methods, which approximately 29 financial institutions are road testing, uses an asset-class-based approach to link financial institutions’ investment and lending portfolios with climate stabilization pathways. 

After road testing is completed, target validation criteria for financial institutions to set SBTs will be developed, followed by a public consultation process. The final methods and criteria are planned for launch in 2020.

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 road testing of draft methods; and a broader Stakeholder Advisory Group (SAG) which provides input at key milestones in the framework development process.

Sign up to join the SAG to participate in the process and receive email updates on this work.

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.

Resources

Download draft SBTi target-setting methods.

Watch a recording and view slides of webinar with Standard Chartered about their experience using the SDA method for electricity generation finance and the PACTA method for oil and gas and automotive sectors (June 2019). Read Standard Chartered’s Emissions white paper (May 2019). 

Watch a recording and view slides of webinar with ASN Bank about their experience with the SDA and PACTA methods (June 2019).

Contact

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

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

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