New Science-Based Targets Initiative Framework for Financial Institutions

The collaborative efforts of environmental disclosure organization CDP, the United Nations Global Compact, the World Resources Institute (WRI), and the World Wide Fund for Nature (WWF) has developed a new system to determine appropriate carbon reduction targets for different entities. The Science Based Targets Initiative (SBTI) emphasizes the role of engagement with underlying assets to encourage companies to reduce their emissions and ignite climate action in such a way that is beneficial to them as well as the planet.

Nearly 1,000 companies in 50 sectors from coal and gas to pharmaceuticals have pledged to align their carbon reduction plans with the Paris Climate Accords by adopting science-based greenhouse gas reduction targets (SBTs).

A target framework has just been developed for banks and other financial institutions. SBTI has launched its first science-based target framework and validation service for financial institutions. Many of them encourage financial institutions to use what they have the most of – money – to effect a decrease in GHG emissions by, for example, using their large stock offerings to put pressure on heavy GHG emitting companies to reduce emissions permanently.

This has been well received. Dozens of banks worldwide previously declared they would work with SBTI standards, when finalized, to give them a framework to meet climate targets. SBTI uses the power of financial institutions to redirect capital to companies contributing to the clean energy and low-carbon, and away from those companies that adversely contribute to climate change.

Banks and financial institutes must also reduce their own GHG emissions. To be validated as meeting SBTI, Scope 1 and 2 GHG emissions of a financial institution must meet an average annual decline at least 2.5%.

CCES has the experts to help you determine your carbon footprint, your greenhouse gas emissions from all sources, direct and indirect and develop cost-effective strategies to reduce these emissions in the future. Contact us today at 914-584-6720 or karell@CCESworld.com.