This paper sets out 11 recommendations for credible net-zero commitments for financial institutions which are seeking to employ state-of-the-art practices.
i. Align with science-based, no/low overshoot 1.5°C scenarios
ii. Align with the assumptions and criteria of the scenarios (including by sector) as soon as possible
iii. Establish near-term (ideally 5-year) targets
iv. Commit to transparent reporting of GHG emissions and their allocation to real-economy inventories
v. Establish an appropriate emission scope, striving for full coverage as soon as possible
vi. Strive for real-economy impact, enabling the transition
vii. Require neutralisation of residual emissions
viii. Finance the transition (considering investments required for the transition and a Just Transition)
ix. Provide transparency on metrics, underlying scenarios and methods used to classify products as sustainable, including appropriately disclosing the sustainability impact of products and services
x. Identify unique purpose implementation; and
xi. Disclose transparently and comprehensively the scenarios, metrics, and targets employed, and disclose progress ideally annually.
Report
Recommendations for credible net-zero commitments from financial institutions
This paper sets out a high-level framework for what a credible, transparent and comparable 1.5°C science-based commitment looks like and what it will mean for the real economy transition. By defining net-zero, this guidance helps financial institutions achieve consistency in target setting and implementation of their net-zero goals. It is an input paper to the G20 Sustainable Finance Working Group authored by UNEP FI.
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