Science-based framework to align financial institutions with climate goals
How the FINZ Standard Defines Net-Zero Targets for Financial Institutions
The Science Based Targets initiative (SBTi) has released its finalised Financial Institutions Net-Zero (FINZ) Standard, the first global framework designed specifically for banks, asset managers, and insurers.
Unlike earlier approaches that focused mainly on operational emissions, FINZ targets financed emissions - the emissions linked to lending, investment, and underwriting.
These often far exceed a financial institution’s own footprint. By focusing here, FINZ brings consistency to the finance sector and translates long-term climate goals into measurable outcomes.
The Standard requires institutions to commit to net-zero by 2050 or earlier, assess a representative base year, and set both near- and long-term targets across major financial activities.
Targets must cover high-emitting sectors such as fossil fuels, heavy industry, and real estate, and meet minimum science-based thresholds. Annual reporting and five-year performance reviews are mandatory, alongside disclosure of metrics like the ratio of clean energy to fossil fuel exposure and the share of climate-aligned financial activities.
As SBTi’s Chief Technical Officer Alberto Carrillo Pineda explains:
"Financial institutions have the power to play a transformative role in the transition to net-zero. Their influence over the global economy and ability to engage portfolios is unmatched in accelerating progress. With its broad applicability and flexibility, this robust science-based standard will help drive the net-zero transformation worldwide."
FINZ Requirements on Fossil Fuels, Deforestation, and Property Finance
The FINZ Standard introduces specific expectations for high-impact areas of the global economy:
🔹Fossil Fuels: Immediate end to project finance for new fossil fuel expansion. A full phase-out of general-purpose finance for coal is required now, with oil and gas expansion phased out by 2030.
🔹Deforestation: Institutions must assess exposure to deforestation risks and publish mitigation or engagement plans where significant risks are identified.
🔹Property: A shift away from financing buildings that are not zero-carbon ready, alongside stronger support for investment in retrofits and climate-aligned construction.
These measures are designed to ensure finance plays a direct role in accelerating the global transition away from carbon-intensive activities.
How the FINZ Standard Defines Net-Zero Targets for Financial Institutions
The launch of FINZ comes at a time of uncertainty, with some institutions stepping back from voluntary climate alliances. Despite this, more than 135 financial institutions worldwide have already committed to align with the new Standard.
As the global finance sector navigates shifting political, regulatory, and market pressures, the FINZ Standard provides clarity, confidence, and a unified pathway to net-zero.
By embedding accountability into the heart of investment and lending decisions, it aims to encourage more institutions - across Europe, North America, Asia, and emerging markets - to commit and deliver on climate goals.
Key Takeaway
With the release of FINZ, the SBTi has raised the bar for climate accountability in global finance. By shifting the focus from operational footprints to financed emissions, the Standard ensures that banks, insurers, and asset managers can turn climate pledges into transparent, measurable progress toward a net-zero future.
