The Science Based Targets initiative has confirmed that financial institutions can continue setting climate targets using the Financial Institutions Near-Term Criteria without a fixed end date. The decision aligns the financial framework with the Corporate Net-Zero Standard Version 2.0 and gives institutions certainty that near-term targets will remain valid throughout their target cycle.
Framework Alignment and Greater Target Certainty
In response to feedback from companies and to maintain alignment across its broader framework, the Science Based Targets initiative (SBTi) confirmed that both the Financial Institutions Net-Zero Standard and the Financial Institutions Near-Term Criteria will remain available without a set expiration date.
This option to establish near-term-only targets mirrors the updated target structure within the Corporate Net-Zero Standard Version 2.0. The SBTi had previously indicated plans to evaluate the future of the Near-Term Criteria in 2027. Removing this deadline provides financial institutions with assurance that validated targets will stay valid across their entire target cycle.
To date, more than 180 financial institutions have secured validated science-based targets. A significant proportion of these institutions are located in Asia, with banks making up approximately one third of the total and private equity firms accounting for roughly a quarter. Many of these organisations rely on target validation status as a key metric when assessing loan terms or valuations for portfolio companies.
Updated Review Timelines and Implementation Tools
The SBTi has updated its Mandatory Five-Year Review Guidance to specify timelines for target cycle reviews relevant to financial institutions. As early cohorts reach the end of their target cycles, the five-year review offers a structured mechanism to check compliance against relevant requirements. Institutions whose targets continue to fulfill applicable criteria will not be required to update them.
Alongside the procedural updates, four finance-specific modules have been launched on the SBTi Academy learning platform. The organisation also released updated implementation resources, including revised FAQs addressing insurance underwriting portfolios, new webinar recordings, and an updated Implementation List.
Additionally, the SBTi has updated its Net-Zero Target-Setting Tool to temporarily pause calculations for power sector technology share targets and automotive emissions intensity reduction targets, pending the finalisation of dedicated sector standards.
Frequently Asked Questions
Do financial institutions need to set net-zero targets to use the Near-Term Criteria?
Financial institutions can choose to set near-term-only targets using the Near-Term Criteria without a specific end date, mirroring the structure of the Corporate Net-Zero Standard Version 2.0.
Does a mandatory five-year review require updating existing targets?
A mandatory five-year review does not automatically require a target update. Financial institutions only need to update targets if they no longer meet applicable SBTi criteria upon review.
