To help financial institutions align investment and lending portfolios with the global 2°C climate goal and support the transition to a low-carbon world, the Science Based Targets initiative (SBTi) is developing target-setting methods and implementation guidance for financial institutions to set science-based targets for their investing and lending activities. The combined methods and guidance, referred to here as the framework, will support financial institutions interested in setting science-based targets and having them validated by the SBTi. Over 30 financial institutions have already publicly committed to setting emissions reduction targets through the SBTi and an additional 70 institutions in this sector reported to CDP in 2017 that they intend to set a science-based target within the next two years.
The target-setting framework is being developed by the partners of the SBTi through an inclusive, multi-stakeholder process to ensure practicality and validity for financial institutions. WRI is the managing SBTi partner for this project. Navigant and the 2DII are providing technical support on method development. Methods from additional method developers will be considered if they meet the needs of the initiative. All draft and final products from the project are freely available on the SBTi website.
The methods and guidance development process is informed by an Expert Advisory Group (EAG) with representatives from financial institutions, consultants, NGOs, and academic institutions. A broader Stakeholder Advisory Group (SAG) also provides input at key milestones in the framework development process. The project audience includes universal banks, asset owners and managers, development banks, pension funds, insurance companies, and sovereign banks.
Framework Development Process and Timeline
Finalize work plan and governance
Complete first draft of target setting methods and make available for public comment
Complete road-testing of draft methods with 20-30 financial institutions
Publish a summary of feedback from public comment process and road testing
Release second draft of methods and first draft of implementation guidance for public comment
Complete final edits to the methods and guidance based on feedback from public comments process
Launch target setting methods and guidance and validate first SBTs in the finance sector
Asset Class Selection and Scope
This project uses an asset class specific approach to link investments and climate pathways. Development of target setting methods for 5 asset classes is intended for this phase of the project. Method development for additional asset classes may be considered for a future phase of work. The figure below summarizes the asset classes and methods in the current scope of work.
Stakeholders are invited to sign up to participate in the framework development process. See slides from the kick-off webinar on February 8, 2018.
Cynthia Cummis, Director Of Private Sector Climate Mitigation, World Resources Institute, [email protected].