Corporate climate watchdog tightens rules for asset managers and banks
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A top authority on corporate climate goals announced it would enforce stricter criteria for financial institutions seeking its endorsement to ensure their short-term objectives better match global climate aims.
The Science Based Targets Initiative (SBTi), a voluntary group evaluating corporate climate strategies, revealed plans to expand its excellence criteria. The initiative emphasizes the need for heightened ambition regarding fossil fuel investment.
Also read: Activists push back against EU’s decision to exclude banks from critical deforestation rule
According to the new stricter regulations, companies’ strategies must align their Scope 1 and 2 emissions, derived from their internal operations and energy consumption, with initiatives to limit global warming to 1.5 degrees Celsius above pre-industrial levels instead of merely aiming to stay under 2 degrees.
The SBTi website currently indicates that 131 financial institutions, including AXA Investment Managers and Aviva, have pledged to establish short-term and net-zero objectives.
Furthermore, firms are required to advance the target timeline for reducing their Scope 1 and 2 emissions from 5-15 years to 5-10 years.
The statement indicated that companies’ Scope 3 emissions, encompassing those associated with a bank’s financing endeavours or an asset manager’s investments, should now adhere to a target of well below 2 degrees Celsius, replacing the previous goal of 2 degrees.
Also read: Citi says 40% of energy clients lack greenhouse gas reduction plans
They must also furnish additional details regarding their lending and overall financing related to the fossil fuel industry, covering all activities.
The SBTi, which has endorsed 4,204 corporate strategies since its inception, is also developing a comprehensive Net-Zero criterion for financial institutions, focusing on long-term planning. However, this standard is presently in the draft stage.
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