The Science Based Targets initiative (SBTi) has released a framework to help determine whether financial institutions’ Paris-aligned strategies are scientifically credible.
55 financial groups – including Bank. J. Safra Sarasin, Standard Chartered and Amalgamated Bank – have already committed to using the pioneering new tool, which will be unveiled later today at an event with former Governor of the Bank of England, Mark Carney.
SBTi hopes that the new framework, which was developed with support from technical partners Ortec Finance, OS-Climate and Guidehouse, will help financial institutions align their lending and investments with the goal of keeping global warming to 1.5°C or well-below 2°C.
But some green finance specialists have criticised the framework’s lack of ambition, particularly around coal financing.
Peter Bosshard, Finance Program Director at The Sunrise Project welcomed the “overall thrust of the new report”, but expressed “regret that it lacks in boldness where it, for example, makes the coal phase-out recommendations optional”.
Paddy McCully, Climate & Energy Programme Director at environmental non-profit Rainforest Action Network, said the framework had “disappointingly failed to live up to its full potential to help decarbonise finance at the rapid speed that science requires”.
He added that to be consistent with the Intergovernmental Panel on Climate Change’s science around 1.5°C warming, “SBTi must also require banks, insurers and investors to immediately stop financing any companies expanding fossil fuel extraction or building new fossil infrastructure, and zero it out by 2050 at the latest”.
The SBTi is a collaboration between highly-regarded NGOs, the World Resources Institute, WWF, CDP and the UN Global Compact.
It said that the new framework sought to “strike a right balance between robustness and practicality for the criteria”.
SBTi is encouraging other financial institutions to submit their targets for SBTi validation and has said that the first 20 submissions will be assessed free of charge as part of the pilot phase. The framework, it added, will be updated in April based on the pilot.