The Science Based Targets Initiative (SBTi) has released its final Financial Institutions Net Zero Standard (FINZ), setting out key requirements for banks, insurers and asset managers to align their activities with net zero goals.
The standard requires institutions to adopt a fossil fuel transition policy that includes ending financing for coal expansion and new oil and gas projects.
General-purpose financing for fossil fuel companies must be phased out by 2030. The final guidance also prohibits the use of carbon removals to offset portfolio emissions and brings insurance underwriting of fossil fuels within scope.
These provisions follow pressure from campaign groups, including Sierra Club and Public Citizen, who welcomed the inclusion of stricter fossil fuel clauses.
Jessye Waxman, Policy Advisor for the Sierra Club, said: “It is encouraging that this new standard makes clear that financing fossil fuel expansion is fundamentally incompatible with any serious net-zero commitment.”
However, the final standard drew criticism for missing key opportunities.
It does not require institutions to publish transition plans or close loopholes around in-scope financial transactions.
Deforestation rules were also weakened, and institutions are given until 2030 to end general-purpose fossil financing, despite concerns this could lock in decades of emissions.
Ernesto Archila, climate and finance lead at Public Citizen, said: “SBTi plays a critical role in the climate fight. The inclusion of insurance underwriting and fossil project finance bans is vital, but delaying action on deforestation and transition plans is a missed opportunity.”
Despite the gaps, FINZ represents the most comprehensive science-based framework for financial institutions aiming to decarbonise.
SBTi hopes it will bring greater consistency and ambition across a fragmented global finance sector.
New net zero rules for financial institutions appeared first on Energy Live News.