SBTi Releases First Net-Zero Standard for Banks and Financial Institutions

The Science Based Targets initiative published its Financial Institutions Net-Zero Standard in July 2025, enabling banks, asset managers, insurers, and private equity firms to set science-based targets aligned with net-zero for the first time. Nearly 135 financial institutions across six continents had already committed to set targets against the standard ahead of its release.

The SBTi Financial Institutions Net-Zero Standard provides actionable guidance for financial institutions to align their lending, investment, insurance, and capital markets activities with a 1.5-degree pathway and net-zero by 2050. Key features include expanded asset class coverage, requirements to improve emissions inventory quality and transparency, an option for institutions to focus on the net-zero alignment of customers rather than setting financed emissions pathways, and guidance on decarbonising the built environment. The standard also requires a fossil fuel transition policy and mandates that institutions assess and address deforestation exposure in their portfolios.

The standard fills a critical gap in the corporate climate framework, as financial institutions wield unique influence over the real economy through capital allocation decisions. By setting portfolio alignment targets, banks and asset managers can incentivise high-emitting clients to decarbonise in the near term. For Indian financial institutions—which are increasingly exposed to climate-related risks in infrastructure, agriculture, and real estate lending—the standard offers a credible framework to manage transition risk while demonstrating alignment with international sustainability expectations.

The standard was developed through two public consultations, pilot testing by more than 30 financial institutions, and input from an independent expert group. SBTi Chief Technical Officer Alberto Carrillo Pineda said financial institutions have unparalleled ability to accelerate the net-zero transition through their portfolio influence. SBTi will host a deep-dive webinar open to all stakeholders to walk through the standard's key elements and target-setting process. Full details are available in the Financial Institution Net-Zero Standard in Brief.

Key figure — Nearly 135 financial institutions across six continents committed ahead of release