FINANCIAL INSTITUTIONS

Miscellaneous resources

• Industry Brief for the SBTi Financial Institutions Net-Zero Insurance Standard

• Net-Zero Asset Owners Alliance and SBTi Finance Comparison Table
• SBTi Financial Sector and TCFD Reporting Guidance

Guidance and Criteria

• Private Equity Sector Science-Based Target Guidance
• Financial Sector Science-based targets Guidance
• SBTi Criteria and Recommendations for Financial Institutions (updated April 2021 version, a previous October 2020 version is also available in Japanese)
• SBTi Financial Sector Science-based targets V2 Pilot Testing Criteria and Recommendations

Submission resources and tools

• SBTi Target Submission Form and Guidance for Financial Institutions – This submission form is prepared specifically for financial institutions to input information necessary for the assessment against the sector specific criteria. It includes fields to enter s1 and 2 and s3 portfolio target information, as well as target language templates and action reporting templates
• Science-based target setting tool – This tool was developed for companies and can be applied to sector-level components of financial institutions’ portfolios. This version of the tool is to be used for modelling targets with 1.5°C ambition, and includes the following sector-specific pathways: Power, Services - Buildings, Residential Buildings, Cement.
• Science-based target setting tool - well-below 2°C for Financial Institutions - This tool is a modification of the above version intended only for use by financial institutions, to be applied to sector-level components of financial institutions’ portfolios. This version of the tool is to be used for modelling targets with well-below 2°C ambition, and includes the following sector-specific pathways: Power, Iron & Steel, Cement, Aluminium, Pulp & Paper.
• Commercial Real Estate and Residential Mortgage Tool
• SBTi Finance tool for temperature scoring and portfolio coverage
• Financial Institutions Tool Demonstration

Tool for temperature scoring and portfolio coverage

We have developed a data-agnostic Python library that is primarily for integration into commercial and homegrown decision support and portfolio management systems, but can also be run as a standalone solution. It is based on the temperature scoring method developed by CDP and WWF.

This tool helps financial institutions to assess the temperature alignment of current emission reduction targets, commitments, and investment and lending portfolios. This information can be used by financial institutions to develop greenhouse gas emission reduction targets for official validation by the SBTi, develop engagement strategies and help with strategic security selection and allocation decisions.

WATCH: Temperature Scoring Tool and Portfolio Coverage Tool demonstrations

Webinar and presentations

• Financial Institution Guidance launch webinar and slides (10/2020)

• Science-Based Targets for Financial Institutions: Criteria Deep Dive Webinar and slides (01/2021)

• Private Equity Guidance walkthrough webinar and slides (06/2022)

• Panel Discussion on Meeting Private Equity Sector Science-Based Targets webinar and slides (07/2022)

• Finance Science-Based Targets: Progress, Best Practice and Next Steps webinar (01/2023)

• 2023 Consultation Period: Public Consultation Kickoff Webinar | Fossil Fuel Finance Position Paper Draft deep-dive webinar | Near-Term Guidance Version 2 Draft deep-dive recording | Q&A session 1 | Q&A session 2 (07/2023 - 08/2023

FI Blogs:

• How Can Financial Institutions Deliver on the Paris Agreement?

• Debunking 4 Myths About Sustainable Investing

• Validation of the first financial institution science based targets is a Turning Point for the Sector

• Growing financial sector science-based targets

• Momentum is Building Quickly in the Finance Sector

• Net-zero finance: developing the Financial Institution Net-Zero Standard

• Introduction to Setting Science-Based Targets for the Private Equity Sector (Part 1)

• Introduction to Setting Science-Based Targets for the Private Equity Sector (Part 2)

• The SBTi’s next big step for Net-Zero Finance

• Science-Based Targets for Private Equity Real Estate Investments

• Science Based Targets for Financial Institutions: 2022 in Review

• Finance sector: New guidance on science-based targets and TCFD reporting

• Evolution of the SBTi Finance Sector Framework

• The SBTi launches three draft financial sector resources for public consultation

• Everything you need to participate in the extended SBTi finance public consultation

• SBTi opens call for Financial Institutions to Pilot its Near-Term Criteria V2

• SBTi Kickstarts Net-Zero for Insurance Underwriting with New Industry Brief

Further Questions

• Science-Based Targets for Financial Institutions FAQs
• Private Equity Sector Science-Based Target Guidance FAQs
• Community Forum for Financial Institutions – This is the primary channel for technical and query support to help FIs on their journey to adopt SBTs on their operations and portfolio activities

More than 55 financial institutions have publicly committed to set emissions reduction targets through the SBTi. In 2018, the SBTi launched a project to help financial institutions align their lending and investment portfolios with the ambition of the Paris Agreement. In October 2021, the first financial institutions had their science-based targets validated.

• Read our blog: A Turning Point for the Sector
• Read the strategy and theory of change that underpin the SBTi’s approach to enabling financial institutions to reduce real economy emissions and contribute to the net-zero transition through science-based targets.

World Resources Institute (WRI) is the managing SBTi partner for this project and works closely with WWF and CDP through a project core team.

Financial support for this work has been provided by Bloomberg Philanthropies, Caisse de dépôt et placement du Québec (CDPQ), ClimateWorks Foundation, Keeling Curve Prize, Hewlett Foundation, and The Bank of New York Mellon.

Temperature Scoring and Portfolio Coverage Tool for Financial Institutions

As part of its framework for financial institutions, the SBTi has developed a data-agnostic Python library that is primarily for integration into commercial and homegrown decision support and portfolio management systems, but can also be run as a standalone solution. It is based on the temperature scoring method developed by CDP and WWF.

This tool helps financial institutions to assess the temperature alignment of current emission reduction targets, commitments, and investment and lending portfolios. This information can be used by financial institutions to develop GHG emission reduction targets for official validation by the SBTi, develop engagement strategies and help with strategic security selection and allocation decisions.

Tool & Resources

Tool User Guide

Tool repository (Github)

Technical Documentation (Online)

Data Requirements: Portfolio Data Template and Company Data Template

CDP-WWF Temperature Rating Methodology

Getting Started Using Python

Temperature Scoring Analysis Workflow Example

WATCH: Temperature Scoring Tool and Portfolio Coverage Tool demonstrations

Recorded webinars

Launch of Temperature Scoring and Portfolio Coverage Tool Beta Test and Draft Guidance

• Recording
• Slides
• Q&A

Beta Tester Technical Deep Dive: Setting Up and Integrating the Tool in Your Workflow

• Recording
• Slides

Beta Tester Workshop: How To Run the Tool and Use Cases

• Recording
• Slides

SBTi Finance Tool User workshop

• Recording
• Slides

SBTi Finance Tool Tech deep dive

• Recording
• Slides

SBTi Finance Tool Demonstration

• Recording

This tool forms part of our framework for financial institutions to set science-based targets.

The SBTi is allowing FIs that have publicly committed to setting a near-term SBT to extend their submission deadline until six months after the publication of the FINZ Standard V1.

• This extension is intended to allow the coordination of near-term and net-zero target development for SBTi assessment.

• To standardize target-setting deadlines, the extension applies to all publicly committed FIs with an active near-term commitment six months after the FINZ standard publication. The FINZ Standard is expected to be published in Q4 of 2023. The extension is optional.

• FIs that wish to partake of this extension must inform SBTi prior to their current public expiration date. FIs may notify SBTi by sending an email to commitments@sciencebasedtargets.org.

• FIs with SBTs that have been validated by the SBTi will not be required to take further action until the expected revision of their targets five years after their publication.

All FI Net-Zero commitments are due 24 months after the release of the FINZ standard.

The below training modules equip FIs with the tools and information needed to set science-based targets against the current Near-Term Guidance (version 1.1).

Each module covers a different aspect of setting financial science-based targets, ranging from making the business case for decarbonizing to completing target calculations.

View the full playlist on YouTube, or take a look at the individual modules below:

• Module 1: The case for change
  • Watch the training session
  • Download the slides
• Module 2: Voluntary finance climate action ecosystem
  • Watch the training session
  • Download the slides
• Module 3: Developing SBTs: Overview
  • Watch the training session
  • Download the slides
• Module 4: Developing SBTs: Scope 1, scope 2, and scope 3 operational emissions
  • Watch the training session
  • Download the slides
• Module 5: Developing SBTs: Scope 3 financed emissions – Overview
  • Watch the training session
  • Download the slides
• Module 6: Developing SBTs: Scope 3 financed emissions – Calculation deep dive and case studies
  • Watch the training session
  • Download the slides
• Module 7: Developing SBTs: Scope 3 financed emissions – Data considerations and trade-offs
  • Watch the training session
  • Download the slides
• Module 8: Validating, disclosing, and recalculating
  • Watch the training session
  • Download the slides
• Module 9: Governance, change management, and meeting targets
  • Watch the training session
  • Download the slides

The SBTi’s framework for FIs was developed through an inclusive, multi-stakeholder process, including consultation with: an Expert Advisory Group (EAG) representing FIs, consultants, NGOs, and academic institutions; financial institutions participating in method road testing; and a broader Stakeholder Advisory Group (SAG) which provides input at key milestones in the framework development process.

Here are highlights from the guidance development process:

2018

• September: First EAG meeting. Read a summary of the discussion.

• December: EAG meeting to introduce the draft methods and solicit initial feedback.

2019

• February: EAG meeting to obtain feedback on the road-testing process.

• April: Launch of methods road-testing process. Watch a recording of the webinar and view slides.

• April-September: Gathered feedback from financial institutions and other stakeholders on draft asset class-based methods through road-testing process and an open stakeholder consultation.

• October: 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. Read a summary of method road-testing feedback (December 2019).

• November: Co-hosted a webinar with Global Compact Network Australia and WWF to share progress on methodologies with financial institutions in Oceania and Asia Pacific. Watch a recording of the webinar and view slides.

2020

• February: Hosted workshops in London and Tokyo to gather feedback from stakeholders on draft target validation criteria. View slides here.

• April: Hosted a webinar to initiate public call for feedback on development of a new temperature scoring draft methodology for companies and investment portfolios. Watch a recording and view slides.

• April-May: Conducted public consultation to gather input from stakeholders on draft target validation criteria and tool development process that will serve as central components of the SBTi’s framework for financial institutions.

• May: Hosted a webinar to share a summary of stakeholder feedback on draft target validation criteria. Watch a recording and view slides.

• May: Participated in a webinar hosted by the Institute of International Finance to share a project overview and update. View recording.

• August: Public consultation on the first draft of the Financial Sector Science Based Targets Guidance took place from August 6-27, 2020.

• July-August: Beta testing of an open-source temperature scoring and portfolio coverage launched.

• August-October: Revised the first draft of the guidance based on feedback received in the survey and other engaged stakeholders; revised the Temperature Rating and Portfolio Coverage tool and tool documentation based on feedback received from beta testers.

2021

• October: The first targets validated by the initiative.

• November: Private Equity guidance released.

2022

• August: Version 1.1 of guidance for FIs released.

2023

• January: SBTi Financial Sector and TCFD Reporting Guidance released.

• June: Consultation drafts of Version 2.0 Near-Term Guidance & Criteria and Recommendations and Fossil Fuel Finance Policy Paper released.

• July-August: Multiple webinars held to inform the public of the Near-Term Guidance update and Fossil Fuel Finance Policy Paper: Consultation Period Informational Webinar | Deep Dive Webinar Near-Term Guidance Update | Deep Dive Webinar Fossil Fuel Finance Policy Paper | Q&A Session 1 | Q&A Session 2

• August: Consultation period concluded.

• November: Call for pilot testers of Version 2.0 Financial Institutions Near-Term Guidance opened.

• December: Pilot testing of Version 2.0 Financial Institutions Near-Term Guidance commenced.

For queries relating to the development process, please email financialinstitutions@sciencebasedtargets.org

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The initiative defines a financial institution as one that engages in investment activities as part of its core functions. These include, but are not limited to, the following:

1. Asset management/asset owners
2. Retail and commercial banking activities
3. Insurance companies (when functioning asset managers)
4. Mortgage real estate investment trusts (REITs)

In addition, if at least 5% of a company’s revenue comes from activities such as those described above, they would be considered a financial institution.

The financial sector’s largest impact comes from its investment and lending activities (known as scope 3 emissions) and therefore it is imperative that targets for this sector encompass such activities.