Financial Institutions Near-Term Criteria to continue without end date

Financial institutions can continue to set near-term targets using the Financial Institutions Near-Term Criteria. In response to company feedback and to remain aligned with the broader SBTi framework, both the Financial Institutions Net-Zero Standard and the Near-Term Criteria will be available to financial institutions without a specific end date.

The continued availability of the option for financial institutions to set near-term-only targets mirrors the new structure of targets within the Corporate Net-Zero Standard Version 2.0, which also allows companies to set near-term-only targets.

The continuation of the Financial Institutions Near-Term Criteria provides greater certainty for financial institutions setting targets—so they can be assured that their targets will remain valid for the entirety of their target cycle. Previous announcements had indicated that the SBTi would consider the future of Financial Institutions Near-Term Criteria in 2027.

To date, more than 180 financial institutions have set validated science-based targets, and many institutions leverage their SBTi validation status as an indicator for their portfolio companies when assessing loan terms and/or company valuations. A high proportion of validated financial institutions are from Asia, around a third are banks, and a further quarter are private equity firms which have used the SBTi’s Private Equity Guidance to help set targets.
 

Clarifying target review timelines

The Mandatory Five-Year Review Guidance has also been updated to clarify the timelines for target cycle reviews for financial institutions which were previously not detailed in the guide. This is important as the first cohorts of financial institutions to have validated their targets are reaching the end of their target cycles.

A mandatory five-year review does not necessarily mean that a company needs to update its targets. The five-year review process provides a structured opportunity for companies to assess their targets against applicable SBTi requirements and determine whether an update is needed. Companies whose targets continue to meet the applicable criteria will not have to update them as part of the review process (see this blog for more information).

Additional target-setting support for financial institutions

To support financial institutions in their target-setting journeys, the SBTi has also released four finance-specific learning modules on its online platform the SBTi Academy, covering subjects from the role of the finance sector in climate action to applying the SBTi’s target-setting frameworks in practice. 

The following new resources to support financial institutions in setting targets with the Financial Institutions Net-Zero Standard have also been published:

• Recordings of two new insurance-focussed webinars exploring the Explanatory Note for Insurance Underwriting, including an introductory overview and a deep dive.
• Updated Financial Institutions Net-Zero Standard FAQs, incorporating stakeholder feedback and providing additional guidance on applying the Standard to insurance underwriting portfolios.
• Updated Financial Institutions Net-Zero Standard Implementation List, including the latest eligible methodology versions and taxonomies, as well as some general language clarifications. 
• Updated Financial Institutions Net-Zero Target-Setting Tool to temporarily pause the calculation of technology share targets for the power sector and emissions intensity reduction targets for the automotive sector, pending finalization of the respective SBTi Sector Standards. 
• Updated Financial Institutions Net-Zero Standard Target-Setting Methods and Tool Documentation to provide additional specifications on the Benchmark Divergence Methodology and reflect the changes to the Tool detailed above.

80% of companies with science-based targets said having targets strengthened investor perception and relations and 44% noted that it improved their access to capital. To set or renew your targets today, go to sbtiservices.com.