The SBTi Financial Institutions Net-Zero Standard: A New Era of Climate Accountability in Finance

Summary

• The SBTi Financial Institutions Net-Zero (FINZ) Standard, launched in July 2025, is the first science-based net-zero framework tailored specifically for financial institutions, addressing the complexities of lending, investing, and underwriting.

• It requires institutions to set near-term (to 2030) and long-term (by 2050) targets to drastically reduce financed emissions, with clear fossil fuel phase-out deadlines and portfolio-wide sectoral alignment.

• The standard emphasizes Scope 3 emissions embedded in financial portfolios, demanding transparency through data disclosure, external validation, and credible Climate Transition Action Plans.

• FINZ introduces explicit portfolio exclusions, banning financing of new coal projects after 2025 and new oil and gas projects after 2030, reflecting urgent decarbonization needs.

• It complements existing frameworks like TCFD, ISSB, and PCAF but is unique in applying sector-level transition metrics and fossil fuel restrictions directly to financial portfolios.

• Adoption by financial institutions will reshape capital allocation, enhance risk management, and offer competitive advantage through credible net-zero alignment and stakeholder trust.

The SBTi Financial Institutions Net-Zero Standard: A New Era of Climate Accountability in Finance

In July 2025, the Science Based Targets initiative (SBTi) released the Financial Institutions Net-Zero (FINZ) Standard, marking a pivotal moment in the climate accountability of the finance sector. As the first net-zero framework specifically designed for financial institutions (FIs), this standard builds upon the SBTi’s corporate net-zero and near-term guidance, while introducing new requirements tailored to the complex dynamics of lending, investing, and underwriting. This article provides a practical breakdown of what the FINZ Standard entails, how it differs from and complements existing frameworks, and the implications for financial institutions and their clients.

Figure 1. Overview of the SBTi Standards system

The SBTi Corporate Net-Zero Standard provides cross-sector requirements and recommendations for scope 1, scope 2, and scope 3 emissions, categories 1–14. The SBTi Financial Institutions Net-Zero Standard provides requirements and recommendations for financial activities (scope 3, category 15)

Why This Standard Matters

The finance sector plays a critical role in global decarbonisation. Approximately 700 financial institutions, such as ING Group, AXA Group, and Aviva PLC, have committed to climate-related goals under SBTi frameworks, but until now, there has been no unified benchmark for what a net-zero target should look like within an FI.

The FINZ Standard aims to change that. It establishes a science-based, measurable, and verifiable framework for financial institutions to align their financed and facilitated emissions with a 1.5 °C pathway. It goes beyond operational Scope 1 and 2 emissions, placing the spotlight on Scope 3 – which for FI’s are the emissions embedded in financial portfolios.

In doing so, the FINZ Standard supports the reallocation of capital away from high-emitting sectors and towards sustainable alternatives, creating a clearer roadmap for net-zero finance.

What Does This Mean for Your Businesses

For companies seeking investment or finance, this new standard means:

• You’ll need to disclose greenhouse gas emissions data, especially if you operate in high-emitting sectors.
• Your decarbonisation plans must be credible, measurable, and verifiable.
• Access to capital may increasingly depend on your alignment with net-zero pathways.

Businesses that can demonstrate alignment with SBTi pathways may find themselves at a competitive advantage when engaging with banks, insurers, and investors.

Key Features of the FINZ Standard

1. Near- and Long-Term Net-Zero Targets 

Institutions must set:

Near-term targets (up to 2030) to demonstrate short-term accountability.

• This includes reducing financed emissions in high-impact sectors such as power, transport and buildings.
•  It may also require portfolio coverage targets (e.g. % of assets aligned with science-based targets) and fossil fuel phase-out commitments.

Long-term targets (2050 at the latest) are aligned with deep decarbonisation pathways.

• Require at least a 90% reduction in portfolio emissions by 2050, with only a small share of residual emissions neutralised through high-quality carbon removals.
• These targets must apply across all relevant financial activities, including lending, investment, and underwriting.

Table A: Financial activities

These targets must be updated at least every five years to ensure they remain aligned with the latest climate science. 

2. Portfolio Coverage and Sectoral Alignment 

The standard covers a range of financial products and services including: 

• Corporate loans
• Project finance
• Equity and debt investments
• Underwriting and insurance portfolios

Institutions must decarbonise portfolio emissions in line with the relevant sector-specific pathways. The use of SBTi-aligned sector guidance (e.g., power, steel, aviation) is encouraged to ensure science-based alignment.

3. Fossil Fuel Phase-Out Requirements 

For the first time, the SBTi introduces some clear portfolio exclusions:

• No financing of new coal projects post-2025.
• No financing of new oil and gas projects post-2030.
• No support for the expansion of existing fossil fuel assets.

These thresholds are designed to prevent continued capital flows into high-emitting infrastructure, reflecting the urgent need to peak and decline global emissions.

4. Data Disclosure and Verification 

Financial institutions are expected to:

• Disclose financed emissions using recognised methodologies (e.g. Partnership for Carbon Accounting Financials (PCAF)).
• Report on deforestation exposure across portfolios by 2030.
• Publish credible Climate Transition Action Plans (CTAPs) outlining interim steps, client engagement, and risk mitigation strategies.

All targets are subject to external validation by the SBTi to ensure integrity and consistency.

Overlaps with Cross-Sector Guidance

The FINZ Standard borrows heavily from the existing SBTi Corporate Net-Zero Standard, including: 

• The requirement for significant emissions reductions before removals are used. 
• A focus on Scope 3 emissions, which are dominant for most FIs. 
• The integration of high-quality carbon removals only for residual emissions.It also complements broader frameworks such as: 
• TCFD and ISSB standards, which guide climate-related disclosures. 
• PCAF methodologies, which support financed emissions quantification. 
• GFANZ recommendations, which encourage long-term transition planning. 

However, what sets the SBTi guidance apart is its explicit application to financial portfolios - adding sector-level transition metrics and fossil fuel exclusions not found in other guidance.
 

Strategic Implications for Financial Institutions

For FIs, aligning with FINZ means more than reporting, it’s about fundamentally reshaping how capital is allocated. Key impacts include:

• Client Engagement: FIs must work closely with portfolio companies to ensure they are on credible 1.5 °C-aligned trajectories. This creates demand for better emissions data and transition planning support.
• Risk Management: Institutions exposed to fossil fuels, deforestation, or other high-emitting sectors will need to assess the financial and reputational risks of non-alignment.
• Competitive Advantage: Early movers such as ING and AXA are positioning themselves as climate leaders by validating their net-zero strategies under FINZ. Validation can be a powerful tool for stakeholder trust and investor confidence.

MyCarbon’s Perspective 

At MyCarbon, we view the FINZ Standard as a critical step toward embedding climate integrity in financial systems. For consultants and institutions navigating this transition, we recommend:

1. Baseline financed emissions now using PCAF-aligned methods.
2. Engage clients in high-emitting sectors to collect data and drive change.
3. Develop and disclose a CTAP that outlines short-term actions and long-term ambition.
4. Leverage SBTi guidance to build rigorous, science-based targets that withstand scrutiny.

The net-zero transition is accelerating, and financial institutions are no longer observers but active participants. The FINZ Standard sets the bar for climate leadership in finance. Now is the time to step up.

Related articles:

EDUCATION: Supporting Tonbridge's Sustainability & Net-Zero Strategy

MANUFACTURING: BHJ Meat Meets Net-Zero

E-COMMERCE: THG's Effective E-Commerce Net-Zero Validation

Contact Us