Corporate Net Zero movement is rapidly accelerating. Insurance firms, investors and banks alike will now be able to verify if their climate goals are aligned to the Paris Agreement via the SBTi or Science-Based Targets Initiative.
The SBTi was launched on the 1st of October and its validation and framework service became available to financial institutions.
This framework which was developed in partnership with CDP, the WRI or World Resources Institute, the UNGC, UN Global Compact and the WWF aims to cover the direct operations of financial firms, their supply chains and the impact these projects and companies held in the portfolios have. When it comes to the assets held by these businesses, there is a greater emphasis on the importance of engagement, calling on the financial firms that sign up to leverage their influence as shareholders to push climate action beyond their direct impact.
Approved targets will cause organisation that commits to reducing their Scope 1 (direct) and Scope 2 (power-related) emissions by 4.2% annually under the 1.5C pathway and 2.5% annually under the ‘well below 2C’ pathway. Scope 3 target requirements will vary based on the kinds of assets which the organisation has holdings in.
As of this moment, about 55 financial firms have made the commitment to using SBTi to set their climate targets with numerous companies that have thrown their support behind the initiative as far back as 2015. These firms have 2 years to get a seal of approval. The biggest organisation based in the UK to have made this commitment is Standard Chartered, which happens to sit on the Taskforce for Nature-related Financial Disclosures and Mark Carney’s Taskforce on Scaling Voluntary Carbon Markets.
The SBTi previously released a statement which said that the first 20 submissions were to be assessed at no cost. A fine-tuning of the framework will then follow this process, with a formal update to be announced in April 2021.
“The SBTi’s framework highlights the power of financial institutions to redirect capital to companies contributing to the low-carbon transition, and away from those that contribute to climate change,” WRI director Cynthia Cummins stated.
“The finance sector now can, and must, build the bridge to a net-zero emissions economy and enable system-wide improvements based on climate science.”
The WWF notably released a film this month which detailed the ways the financial industry had contributed to nature loss and climate change historically, whilst also providing the necessary steps that it must take to change the entire industry as a force for good.
This announcement from the SBTi came on the heels of it having issued its first guidance on a future framework which would be used to verify net-zero targets. The paper highlights that net-zero targets have to be consistent with the 1.5C trajectory whilst neutralising the impact of any sources of residual emissions that cannot be eliminated.
New research from Data-Driven EnviroLab and the NewClimate Institute proves just how rapidly the corporate net-zero movement has taken off. The organisations’ ‘Accelerating Net-Zero’ report reveals that 1,541 businesses globally have set net-zero targets of some kind, up from 500 in December 2019. During the same time period, the number of regions with net-zero targets rose from 11 to 101, and the number of cities from 100 to 823.
