Banking Giants Opt for Less Stringent Climate Target Validation Requirements, Endangering the Transition to a Sustainable Economy
Four major banks, including Standard Chartered Plc and HSBC Plc, have opted to withdraw from the Science Based Targets initiative (SBTi) validation process for their climate targets. Simultaneously, concerns have been voiced by others, such as Societe Generale SA and ABN Amro Bank NV, asserting that SBTi's greenhouse gas emissions targets would be too difficult to meet. Additionally, no major US bank has joined SBTi.
These actions occur just before the anticipated launch of a new SBTi standard designed to assess financial institutions’ net zero goals, with stricter limitations on fossil fuel financing. Some banks justify their decision by citing their membership in another United Nations-backed group, the Net-Zero Banking Alliance (NZBA). However, NZBA’s requirements are perceived by some financial institutions as an initiative with relatively less stringent and easier-to-meet requirements (e.g., allowing lenders to continue to finance fossil fuels in specific cases). SBTi asserts that it would not be possible to achieve targets without reducing dependence on fossil fuels and reporters observe a trend among financial institutions in attempting to “lower the bar on the emissions they help finance”.