New SBTi Net-Zero Standard Sets Benchmarks for Financial Sector

A major milestone in climate finance has arrived: the Science Based Targets initiative (SBTi) has officially released its Financial Institutions Net-Zero Standard, providing banks, insurers, asset managers, and private equity firms with a clear blueprint to align with global net-zero targets.

Financial district with solar-powered skyscrapers and rooftop gardens under a clear summer sky. AI generated picture.

This is the first time financial institutions have access to a unified, science-based framework to set long-term net-zero goals across all their activities. Developed with input from more than 30 pilot institutions, alongside public consultations and expert review, the Standard responds to growing market demand for credible, climate-aligned finance.

At its core, the Standard promotes an ‘engagement-first’ approach, encouraging financial institutions to work directly with their portfolio companies to help them adopt science-based climate targets. This approach is designed to spark change in high-emitting sectors and embed net-zero thinking into the heart of financial decision-making.

Institutions can choose between two target-setting strategies:

• Portfolio-wide climate alignment: Measures the overall sustainability performance of investments.
  
  
• Sector-specific targets: Focuses on emissions-heavy areas such as fossil fuels, real estate, and activities linked to deforestation.

Activities covered by the new framework

To ensure broad applicability, the Standard applies to any financial entity that earns at least 5% of its revenue from these core financial activities.

This new framework is about more than setting goals—it’s about action and accountability. The Standard introduces several critical requirements:

• Fossil fuel phase-out: Immediate halt on coal financing, with a full stop to general-purpose finance for oil and gas expansion by 2030.
  
  
• Deforestation risk management: Institutions must identify and address any exposure to deforestation by the next target renewal cycle.
  
  
• Zero-carbon building policy: Strong guidance to avoid financing new buildings that are not zero-carbon-ready, while encouraging retrofitting existing assets.

In addition to emissions cuts, the Standard also raises the bar on transparency—demanding better data quality and more robust disclosures from participating institutions.

With nearly 135 institutions across six continents already committed, the framework is quickly gaining traction as a new benchmark in sustainable finance.

‘Financial Institutions have the ability to play a transformative role in the transition to net-zero’, said Alberto Carrillo Pineda, Chief Technical Officer at the SBTi. ‘Their influence on the global economy and ability to engage with their portfolios is unparalleled to accelerate the net-zero transition.’

A summary guide—Financial Institutions Net-Zero Standard in Brief—is now available, alongside a public webinar series to help stakeholders get started.