The Science Based Targets initiative (SBTi) has unveiled its much-anticipated Financial Institutions Net-Zero Standard, a new framework designed to help the finance sector align with the global transition to a net-zero economy. This marks the first time financial institutions can formally set science-based, net-zero-aligned targets across their entire portfolio.
Sustainable financial district with solar-powered towers and lush rooftop greenery on a bright summer day. AI generated picture.
Built in collaboration with over 30 financial entities and shaped through public consultations and expert review, the Standard offers banks, asset managers, insurers, and private equity firms a structured pathway to decarbonise their operations and influence the broader market.
The Standard enables institutions to take an ‘engagement-first’ approach—prioritising active dialogue with portfolio companies to encourage the adoption of their own science-based targets. This strategy aims to catalyse systemic change across sectors, particularly among high-emitting industries, by embedding climate alignment into the core of investment, lending, and insurance practices.
Read more: SBTi accelerates Net-Zero Standard 2.0 to meet 2026 target
Institutions can choose between two main target-setting approaches:
- Portfolio-level environmental alignment targets, which track the overall nature-related performance of holdings.
- Sector-specific emissions targets, which focus on the most intensive sectors such as fossil fuels, buildings, and deforestation-linked activities.
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Activities covered by the new standard.
The Standard is addressed to the institutions generating at least 5% of their revenue from the above activities
Crucially, the Standard allows financial institutions to shift emphasis from merely tracking financed emissions to aligning with the net-zero readiness of their counterparties. This flexibility acknowledges the complexity of financial markets while still demanding tangible impact.
Several new requirements set this Standard apart:
- Fossil fuel transition policy: Institutions must immediately halt new coal financing and commit to ending general-purpose finance for oil and gas expansion no later than 2030.
- Deforestation exposure: By 2030, institutions must assess and address portfolio exposure to deforestation, including implementing an engagement plan where necessary.
- Built environment guidance: Financing for new buildings must prioritise zero-carbon-ready design, with stronger support for retrofitting existing infrastructure.
The framework also improves expectations around emissions data quality, transparency, and disclosure—key concerns for stakeholders, regulators, and climate-conscious investors.
Nearly 135 financial institutions across six continents have already committed to setting targets aligned with the new Standard, underscoring strong market appetite.
‘Financial Institutions have the ability to play a transformative role in the transition to net zero. Their influence on the global economy and ability to engage with their portfolios is unparalleled to accelerate the net-zero transition. With its broad applicability and flexibility, this robust, science-based Standard will help financial institutions drive the net-zero transformation all over the world’, said Alberto Carrillo Pineda, Chief Technical Officer at the SBTi.
The SBTi has also published a summary document—Financial Institutions Net-Zero Standard in Brief—to support implementation and understanding.
Read more: Why scope 3 emissions are your biggest blind spot—and what to do about it
As financial institutions adopt the SBTi’s new Net-Zero Standard, the path to environmental alignment is no longer abstract—it’s measurable, sector-specific, and urgent. With expectations rising around emissions transparency, deforestation exposure, and fossil fuel disengagement, real-world green action is now a business imperative. At DGB Group, we empower forward-thinking companies to meet this moment with nature-based solutions that are high-impact, independently verified, and aligned with the strictest international benchmarks. Whether you're navigating new disclosure rules or building a resilient sustainability strategy, we’re here to help you lead with integrity. Discover how you can turn net-zero commitments into lasting environmental impact—starting now.
