The Science Based Targets initiative (SBTi) has rolled out its first Financial Institutions Net-Zero Standard (FINZ). This framework offers banks, asset managers, insurers, and investors a clear path to aligning their portfolio activities—including lending, underwriting, and investments—with net‑zero emissions by 2050.
The FINZ standard sets clear rules on:
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Portfolio emissions
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Fossil fuel finance
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Deforestation risk, and
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Reporting
It aims to transform how the finance industry aligns with global climate goals and steers clean capital flows.
Why the New Standard Matters to Climate and Finance
Financial institutions are hugely influential. Their financed emissions—the greenhouse gases tied to the companies they finance—are typically hundreds to thousands of times higher than their own operational emissions.
They account for over 99% of financed emissions through loans, underwriting, and investments. One study found financed emissions can be 750 times greater, and for North American banks that rose to 11,000 times more than their own direct output.
Yet until now, most net‑zero frameworks focused on operational emissions (Scope 1 and 2). The FINZ Standard tackles Scope 3 category 15 emissions—those tied to clients and invested companies. It offers a sector‑specific roadmap for carbon impact across financial services.
Moreover, it strengthens transparency and accountability in financed emissions, including underwriting and capital markets. The UN-backed SBTi aims to drive major reductions. This tool targets not only corporate operations but also global capital markets.
Alberto Carrillo Pineda, SBTi’s Chief Technical Officer, noted:
“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.”
Key Requirements: What FINZ Demands
Here are the major requirements set by the new standard:
Fossil Fuel Finance Phase‑out
Signatories must immediately stop financing new coal and oil field expansion. Financing for new oil and gas projects must also end by 2030. This shift separates general-purpose finance from investment that supports fossil fuel growth.
Portfolio Emissions Targets
Institutions need to measure and set science-based targets. These targets must cover all lending, investment, underwriting, and capital market operations (Scope 3 category 15+). They must align with a 1.5 °C pathway and match the ambition of SBTi’s corporate standard. Public targets and interim milestones are required.
Deforestation and Real Estate Risk Reporting
Banks and asset managers must assess exposure to deforestation and real estate. Those with significant risk must publish mitigation plans. This broadens climate accountability beyond just fossil fuel financing.
Stakeholder Response: Support and Criticism
Over 150 institutions contributed to public consultations, and 33 firms pilot‑tested the standard.
Over 150 financial institutions contributed to public consultations, and 33 firms pilot-tested the draft standard. Also, nearly 135 institutions across six continents have committed to align with FINZ already.
SBTi has validated the most near-term institution targets to date—a nearly 50% increase year-on-year. It also expects more growth under new CEO David Kennedy, with ambitions to scale to 20,000 companies by 2030.
Many praised the approach as both rigorous and practical. The Sustainable Finance Observatory welcomed the initiative’s wider focus. It includes loans, insurance, capital markets, and portfolio investment.
Yet critics highlight a major tension: the delay in phasing out fossil fuel finance until 2030. A recent report found that nearly 95% of bank fossil-fuel financing in 2024 went via general-purpose loans, not project-specific funding—potentially locking in more fossil fuel use this decade.
Some experts argue that progress toward net‑zero demands an immediate cutoff. SBTi believes that slower advocacy could allow more institutions to join in. This might lead to a bigger overall impact.
Major banks like HSBC and Standard Chartered left the SBTi climate approach. They had worries about the new standard’s strictness and how practical it is.
Meanwhile, ING is the first global bank to have validated SBTi targets. It has also promised to stop financing new fossil fuel projects by 2040. It will also cut coal power finance close to zero by 2025.
What It Means for the Carbon Credit Market
The FINZ Standard raises the bar for carbon credit demand. It is also likely to shape the future of the voluntary carbon credit market. Financial institutions are facing stricter rules on financed emissions. So, many will seek verified carbon removal solutions to hit their climate targets.
The SBTi usually doesn’t let carbon offsets replace real emissions cuts but it does see a small role for carbon removals. This is especially true for options like direct air capture or biochar that store carbon long-term.
This creates new demand for high-quality, science-based carbon credits, especially those tied to durable removal projects. Nature-based credits, like forest restoration, may increase in value. This is true if they meet strict verification and permanence standards.
Moreover, financial firms can help fund new carbon projects by investing in climate mitigation. This is especially important in emerging markets, where capital is often hard to find.
Overall, the new standard brings greater credibility to net-zero claims. This could lead to more serious investment in carbon markets. It may focus on removal and insetting instead of just short-term offsets. The standard might also lead buyers to choose credits certified by third-party groups. These should align with international standards like ICVCM and VCMI.
Looking Ahead: Adoption and Market Shifts
The FINZ Standard has been published in July 2025, with a global consultation now closed. It is expected to become mandatory for SBTi‑aligned institutions over the coming years. Here are major development to watch:
- The Financial Institutions Near-Term Criteria (FINT) will stay valid until 2026. New institutions should adopt the FINZ standard now.
- By early 2026, SBTi plans to fully roll out the standard under new CEO David Kennedy. As climate risk grows, it will impact financial stability.
- FINZ might set regulatory standards and change how banks are monitored for climate-related issues.
- Over time, institutions that meet FTIN 1.5 °C‑aligned targets and halt fossil fuel expansion financing will likely enjoy reputational gains and stronger ESG investor support. Conversely, those lagging could face legal, regulatory, and financial scrutiny.
SBTi’s Financial Institutions Net‑Zero Standard is a landmark tool for holding banks and investors accountable for financed emissions. Clear standards on fossil fuel finance, portfolio coverage, and disclosure help align financial flows with net‑zero pathways.
Some critics worry about the slow phase-out of fossil fuel financing. However, many view the new Financial Institutions Net-Zero Standard as a practical method that helps engage institutions and improve climate alignment sooner.
As more firms join, purchase high-quality carbon removals, and report robust financed-emissions targets, the standard could accelerate real emissions cuts. FINZ standard signals a change for those tracking ESG investments, carbon credits, and climate policy. It brings credible, science-based finance and acts as a new tool in the low-carbon market.
