SBTi tells banks no more support for fossil fuel expansion

22 July 2025 – A new net-zero standard for financial institutions rules out support for companies developing new coal, oil and gas projects, including liquefied natural gas (LNG) infrastructure. The Science Based Targets initiative net zero standard for financial institutions (SBTi FINZ), published today, is intended to enable banks, investors and insurers to set emissions reduction targets that are consistent with achieving net-zero across their portfolios by 2050 (1). Reclaim Finance welcomes the strong signal on fossil fuel finance but warns that the 2030 cut-off for general corporate financing is not aligned with scientific evidence and still enables new expansion. The NGO urges financial institutions to immediately end essential services to fossil fuel developers to meet the 2030 deadline.

According to the new standard, which has been in development since 2021 (2), financial institutions that want their climate targets to be validated by the SBTi must publish a “fossil fuel transition policy” (3) which requires them to:

Immediately end project and corporate financing for new thermal coal mines and coal power plants (4).
Immediately end project financing for new oil and gas production and LNG infrastructure.
By 2030 at the latest, end general-purpose financing for new oil and gas production and LNG infrastructure.

The SBTi is sending a welcome clear message that no financial services should be provided to companies developing coal, oil or gas. Financial institutions just cannot wait until 2030 to do this if we are to avoid a massive carbon lock-in that would destroy any hope of climate mitigation (5). In practical terms, this means they must start to phase out financing for oil and gas expansion now.

Paul Schreiber, senior policy analyst at Reclaim Finance and a member of the SBTi Expert Advisory Group

Indeed, only 7% of the financing provided by banks to fossil fuel companies comes in the form of project finance (6). Most of the financial services are granted at corporate level and could notably help finance the 200 billion barrels of resources from new oil and gas fields already planned to be approved between 2026 and 2030, the equivalent of 3.6 times global production in 2023 (7).

Reclaim Finance therefore calls on financial institutions to immediately end loans, bond underwriting, and insurance coverage to companies developing fossil fuels. These financial services play a central role in the development of oil and gas and ending them now is a key step in meeting the SBTi criteria and 2030 deadline.

Contacts:

Paul Schreiber, Senior policy analyst, paul@reclaimfinance.org, +33 6 89 02 07 88
Helen Burley, International press relations, helen@reclaimfinance.org, +447703731923

Notes:

See: https://sciencebasedtargets.org/net-zero-for-financial-institutions
The project to develop the standard was first launched in 2021. The Foundations for Science-Based Net-Zero Target Setting in the Financial Sector was published in 2022.
To get validated, financial institutions will have to set targets regarding their “climate alignment” – i.e increasing share of counterparties considered in transition or aligned with climate goals – and their emissions – i.e reducing aggregate emissions of the portfolio to near-zero and ensure any residual emissions are neutralized by counterparties.
Financial institutions must also set policies on three topics: fossil fuels, deforestation, and real estate.
Beyond the criteria listed above, financial institutions must set specific targets for the fossil fuel sector:
- Counterparties phase-out coal by 2030 for OECD and 2040 worldwide.
- (95% of supported fossil fuel companies must be considered transitioning (scope 1-3 emission reduction and no fossil fuel expansion) by 2035 following a linear pathway.
- Absolute emission reduction target for the sector aligned with the IEA Net-Zero Emission (NZE) scenario.
The coal exclusion does not cover so-called “metallurgical” coal. However, Reclaim Finance notes the distinction between “thermal” and “metallurgical” coal is not clear-cut and coal branded as “metallurgical” can be used for power generation. Therefore, the NGO stresses coal policies should be extended to cover all grades of coal, including both “thermal” and “metallurgical” coal. Furthermore, the NGO underlines global climate mitigation goals also require decarbonization of steel, with the progressive phase-out of coal-powered blast furnaces.
See: Fergus Green and al, No new fossil fuel projects: the norm we need, Science, 2024
Data from Banking on Climate Chaos 2025.
This represents the estimated resources of all projects scheduled to reach their Final Investment Decision (FID) between 2026 and 2030. The data was extracted by Reclaim Finance from the Rystad Energy database.