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🗞️ Driving the news: The Science Based Targets initiative (SBTi) has launched its Financial Institutions Net-Zero Standard, offering for the first time a science-based framework for banks, asset managers, private equity firms, and insurers to align their portfolios with global net-zero targets by 2050
• Nearly 135 institutions across six continents have already committed to adopt the new Standard, which covers lending, investments, insurance, and capital markets activities
🔭 The context: Financial institutions wield significant leverage over emissions through the companies and projects they finance
• Until now, a lack of sector-specific guidance limited credible target-setting in the financial sector. The new Standard follows years of consultation, pilot testing, and stakeholder feedback, building on SBTi’s earlier corporate net-zero frameworks
• It comes amid growing investor and regulatory scrutiny of “greenwashing” and a push to align capital markets with the Paris Agreement’s 1.5°C goal
🌍 Why it matters for the planet: Aligning global financial flows with climate goals is essential to funding the low-carbon transition and phasing out high-emissions activities
• By establishing clear criteria for deforestation risks, fossil fuel exit plans, and built environment decarbonisation, the Standard aims to shift trillions of dollars toward climate-resilient investments
• Its uptake will determine whether the financial sector acts as a true enabler of systemic decarbonisation or continues to finance emissions-intensive growth.
⏭️ What's next: Institutions will now begin the three-stage SBTi validation process — setting initial, renewal, and target-year commitments — with annual public reporting
Key milestones include mandatory deforestation risk disclosures by 2030 and clear fossil fuel transition plans with defined phase-out timelines
Attention will turn to how effectively institutions implement the Standard’s dual-targeting approach, balancing portfolio-wide alignment with sector-specific strategies, while addressing accountability and governance gaps
💬 One quote: “Financial institutions have the ability to play a transformative role in the transition to net-zero — their influence on the global economy is unparalleled,” — Alberto Carrillo Pineda, SBTi’s Chief Technical Officer
📈 One stat: Nearly 135 financial institutions worldwide have already pledged to align with the new Net-Zero Standard at launch
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