How can FI commit to Net Zero if the guidance is not yet available?

Net Zero for FIs
1

Hello,

We are a Private Equity focused on sustainable investments and would like to commit to SBTi in the coming weeks. We are trying to understand how to consider the option to also commit to net-zero in the commitment letter:

  • From the SBTi companies taking action database, numerous FI (100+) committed to net-zero, but how do we interpret this commitment if the guidance is not yet available? Did they commit “blindly” to follow the requirements once they will become available?
  • If we do not flag this option now, can we do so as an integration to our commitment once the guidance becomes available?
  • If, on the contrary, we commit to net-zero now, and realize we are not able to reach the target after the requirements are published, how does this impact our near-term commitment?

Thank you for your reply.

Caterina

2

Hello Caterina,

this is my personal opinion stemming from work I’ve done with clients in regard to the net-zero question.

  1. Those who have committed to a net-zero science based target have done so without knowing what the SBTi’s recommendations would or might be. They were by no means considering this blindly but rather on the basis of a pre-work by a) calculating their Scope 1 and 2 emissions plus Scope 3, Category 15, emissions and setting an indicative Emissions Reductions Roadmap (ERR) to reduce all these to net-zero by 2050 (or earlier in some cases). This helped in their decision making to commit to net-zero through SBTi.
  2. From what I understand, committing to net-zero through SBTi can be done at any stage and does not need to be an upfront commitment. Targets can be updated throughout the process. Near-term target setting tools and recommendations are available already and should help as guidance.
  3. This links back to the 1st point where a solid and thought through ERR should help determine whether net-zero can be achieved. What the impact is, this is best for someone from the SBTi to comment on.

Again, some feedback from work I have done on this topic but not an SBTi view.

Thanks.
Gregor

3

Please note that signing the SBTi commitment letter is an optional step. FIs may instead just go straight to setting near-term targets using the existing Near-Term Financial Sector SBT Guidance (and/or PE Guidance, if relevant) and submitting them to the SBTi for validation.

For FIs that do want to commit to setting a net-zero target before the publication of the FI Net-Zero Standard, they will have 24 months after its publication to submit their targets. For FIs that first commit to setting a near-term target and then later decide to also commit to setting a net-zero target, please note that signing a new commitment letter (e.g., to add a net-zero commitment) does not change the deadline of the original commitment.

Please also note that companies and FIs that fail to submit their targets for validation within the 24 months will have their commitments marked as ‘Removed’ on the SBTi Target Dashboard, per the SBTi Commitment Compliance Policy.