Guidelines for Climate Target Setting for Banks

Published April 2021

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The Guidelines for Climate Target Setting for Banks outline key principles to underpin the setting of credible, robust, impactful and ambitious targets in line with achieving the objectives of the Paris Agreement.

The guidelines outline four principles for target-setting:

  1. Banks shall set and publicly disclose long-term and intermediate targets to support meeting the temperature goals of the Paris Agreement.
  2. Banks shall establish an emissions baseline and annually measure and report the emissions profile of their lending portfolios and investment activities.
  3. Banks shall use widely accepted science-based decarbonisation scenarios to set both long-term and intermediate targets that are aligned with the temperature goals of the Paris Agreement.
  4. Banks shall regularly review targets to ensure consistency with current climate science.

The guidelines were drafted by the signatories to UNEP FI’s Collective Commitment to Climate Action, a leadership group of banks accelerating the commitment all Principles for Responsible Banking signatories have made to align their portfolio with the goals of the Paris Agreement. These guidelines also underpin the UN-convened Net-Zero Banking Alliance where banks have committed to a timeline of net-zero by 2050. The guidelines will be reviewed at least every three years, and sooner when required.

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Foundations of Climate Mitigation Target Setting

Looking for more assistance in implementing the Guidelines? Learn more about the science, process, and context of target setting in the Foundations of Climate Mitigation Target Setting. 

Scientific findings show that climate change is already causing a loss of species and biomes and impacting human security, food production, and economic activity. Beyond an average warming of 1.5°C above pre-industrial levels, certain impacts could be irreversible, creating serious consequences for human society and the natural world. Urgent action must therefore be taken on both mitigation of ongoing emissions and adaptation to the already-present physical climate change. 

The Principles for Responsible Banking believe banks must take a leading role in this action. While banks have low direct emissions, their climate impact comes predominantly from what they finance, facilitate, or invest in. On average, these financed emissions are 700 times greater than a bank’s operational emissions. As controllers and facilitators of capital, banks can be at the core of the systemic change needed to help transition the economy. But leading this change requires banks to set and achieve ambitious, robust, and science-based targets – get started with the Foundations of Climate Mitigation Target Setting. 

Download the Foundations