Proposed net zero guidance for financial institutions (FIs) from the Science Based Targets Initiative (SBTi) has been strongly backed for its clarity and ambition on fossil fuel finance. The guidelines represent “a significant improvement in net zero alignment benchmarks”, said the Institute for Energy Economics and Financial Analysis (IEEFA), responding to a consultation which closed this week. IEEFA welcomed the guidelines’ stance on phasing-out fossil fuel finance, including the “immediate cessation” of new financial flows and targets for ending all flows to existing fossil fuel activities. It also supported the SBTi’s view that offsets “must not” be counted toward companies’ or FIs’ science-based targets, and its insistence on high and provable efficiency rates for all abatement claims. But IEEFA also identified areas for improvement, including a tightening of policy coverage and greater detail on engagement processes. In June, SBTi launched a consultation on three elements of its net zero standard for FIs as well as on revisions to its fossil fuel position paper. A joint response by Americans for Financial Reform Education Fund, Public Citizen, and the Sierra Club commended the SBTi’s “strong standard” on fossil fuel finance, but also called for the setting of Scope 1, 2, and 3 targets using 1.5°C pathways with no/low overshoot and only a limited level of negative emissions. Another draft of the standard is expected to be published in Q3, with a final version released in 2024. “We encourage SBTi to stand firm on its commitment to scientific rigour in its proposals, and we hope that it fully considers and adopts our recommendations to strengthen its guidance and further minimise the risk of greenwashing,” said Jessye Waxman, Senior Campaign Representative in the Sierra Club’s Fossil-Free Finance campaign.
