To support Net-Zero Banking Alliance (NZBA) member banks in developing targets, the Alliance has developed this short paper to provide clarification on the already-published Guidelines for Climate Target Setting for Banks outlining how the Alliance views the treatment of offsetting in relation to member commitments.
The paper does not introduce additional principles that member banks must meet as part of their NZBA commitment. It states in summary that:
- For end-state Scope 3 Category 15 targets, only carbon credits from projects that remove GHG from the atmosphere (“carbon removal credits”) and which are limited to instances where technologically or financially viable emissions elimination alternatives do not exist, are consistent with NZBA guidelines.
- For interim Scope 3 Category 15 targets, NZBA recognizes a potential supplemental role for carbon credits where the credits are client attributed (i.e. accounted for by the client, and may be self-generated, procured by the client, or procured and held in custody by a third-party or a bank on behalf of the client), meet high quality criteria, and do not exceed volumes consistent with a sectoral target that aligns with a science-based net-zero climate scenario.
- For interim Scopes 1, 2 and 3 (Categories 1–14) targets, banks are encouraged first and foremost to look to reduce their direct and indirect emissions when setting targets for these emissions.
The Alliance expects that any carbon credits utilized are consistent with the sectoral decarbonization pathway of a selected climate scenario. Only carbon credits for which clients or the bank have provided evidence that they meet overall quality principles are considered eligible. Any inclusion of client-attributed carbon credits should be reported by the banks.