Paris, 7 December 2023 – <\/span><\/b>In a shocking twist, the Science Based Target initiative (SBTi) has weakened its pilot standard for setting \u201cnet-zero\u201d targets in the financial sector to enable banks, investors, and insurers to continue to support fossil fuel development. The criteria set by the organization in the pilot version of its net-zero standard for financial institutions could leave 96% of the financing for oil and gas and up to half of the companies developing new coal projects untouched. Reclaim Finance says keeping such criteria would mean giving up on any \u201cscience-based\u201d ambition and urges the SBTi to ensure no financial institutions can be validated while supporting coal, oil and gas development.<\/span><\/b>\u00a0<\/span><\/p>\n<\/div> Since April 2022, the Science-based target initiative (SBTi) has been working on developing \u201cthe world\u2019s first Standard for science-based net-zero targets\u201d in the financial sector. This standard is intended to \u201cenable financial institutions to set net-zero targets that are consistent with achieving a net-zero world by 2050\u201d.<\/span> <\/span><\/p>\n Early on in this development process, the SBTi recognized the need to limit financial services provided to fossil fuel companies and projects to validate net-zero targets from banks, investors, and insurers (1). Then, the SBTi proposed draft criteria that notably banned support for new fossil fuel projects and the companies that develop them in a paper submitted for consultation in June 2023 (2). But, following pressure from major banks like Standard Chartered and Soci\u00e9t\u00e9 G\u00e9n\u00e9rale (3), the last version of these criteria (4) has been drastically weakened. <\/span> <\/span><\/p>\n<\/div><\/div><\/div> It is quite shocking to see the Science-based target initiative cave <\/span>in to<\/span> pressure from financial institutions. By going back on their decision to get their decarbonization targets <\/span>validated<\/span> by the initiative, banks recently signaled they would do anything to avoid binding criteria that would force them to restrict their support to fossil fuel companies. But the fact that powerful financial institutions are unfaithful to their own climate commitments should not have driven the SBTi to give up on the mountain of scientific evidence (5) that underpins the need to <\/span>immediately<\/span> end fossil fuel development. Without a swift review, the standard can no longer claim to be \u201cscience-based\u00a0\u00bb.<\/span><\/span><\/em><\/p>\n<\/div> Paul Schreiber, Senior Policy Advisor at Reclaim <\/span>Finance<\/span> and member of the Technical Advisory Group (TAG) of the SBTi and of the Technical Expert Group (TEG) working on the framework for financial institutions<\/span><\/span><\/strong><\/p>\n<\/div><\/div><\/div> The most recent version of the oil and gas criteria applies to financial services directly granted to projects, therefore allowing financial institutions to keep supporting oil and gas expansion through corporate finance (6). Data from the <\/span>Banking On Climate Chaos<\/span><\/i> report (7) shows project-specific finance only accounts for on average 4% of total finance to fossil fuels annually.\u00a0<\/span>\u00a0<\/span><\/p>\n In the same text, fossil fuel companies are no longer defined as companies deriving at least 5% of their revenue from fossil fuels. Financial institutions can choose between two definitions for coal companies (8). They are either defined as companies listed on the Global Coal Exit List (GCEL) that covers most of the sector, or as companies that derive more than 10% of their revenue from coal, which leaves out a significant part of the industry. Of the 577 coal companies that develop new projects listed on the GCEL 2023, up to 284 (49%) could remain out of the SBTi criteria (9).<\/span>\u00a0<\/span><\/p>\n<\/div><\/div><\/div> Small changes have dramatic consequences. By removing its requirement to end financial services to oil and gas developers and by raising the revenue threshold used to define coal companies, the SBTi lets so-called \u201cnet-zero\u201d financial institutions continue to <\/span>provide<\/span> 96% the financing to oil and gas and support up to half of all coal developers. If the SBTi does not walk back on these changes, its validation will be nothing more than another greenwashing stamp that protects climate-wrecking business as usual by the financial sector.<\/span><\/span> Paul Schreiber, Senior Policy Advisor at Reclaim <\/span>Finance<\/span> and member of the Technical Advisory Group (TAG) of the SBTi and of the Technical Expert Group (TEG) working on the framework for financial institutions<\/span><\/span><\/strong><\/p>\n<\/div><\/div><\/div> Reclaim Finance urges the SBTi to review its fossil fuel criteria to ensure both project and corporate financial services for companies developing oil and gas are covered and all coal developers are excluded from any support (10).<\/span>\u00a0<\/span><\/p>\n<\/div><\/div><\/div>
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