In a surprising turn of events, three major asset finance banks – Societe Generale, ABN AMRO Bank, and HSBC – have decided to forgo climate target verification by the Science Based Targets Initiative (SBTi). This United Nations-backed initiative has long been regarded as the gold standard for credible net-zero assertions.

Brought to light by Reuters this week, the news underscores the banks’ concerns that adhering to SBTi rules would impose limitations on their ability to finance fossil fuels. 

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Some banks, including Societe Generale and ABN Amro Bank, challenge the greenhouse gas emissions targets set by SBTi which they perceive as being excessively stringent, as reported in the financial press.

The SBTi recently announced plans for a new standard specifically tailored for financial institutions, slated for implementation by 2024. This proposed standard was anticipated to mandate banks and asset managers to refrain from financing new fossil fuel projects.

However, the banks’ decision to step away from SBTi’s verification process signals a deeper conflict between environmental responsibility and the financial sector’s dependence on fossil fuel financing. 

In response to concerns, SBTi has adjusted certain requirements, allowing banks to fund specific fossil fuel projects if they align with short-term emission targets. Nevertheless, financing projects that could impede long-term emission goals remains strictly prohibited.

The departure of Societe Generale, ABN Amro Bank, and HSBC from SBTi’s climate verification processes raises questions about the broader commitment of financial institutions to combat climate change. While these banks cite concerns about the practicality of SBTi’s targets, critics argue that it reflects a reluctance to embrace much-needed environmental standards.

In response to these developments, spokespersons from HSBC and ABN Amro have indicated that their organisations will now turn to alternative bodies, such as the NZBA, for climate target guidance. 

The assertion that “SBTi isn’t the only standard-setter,” as reported by Bloomberg, opens the door to a broader discussion about the role of various standards in guiding the financial sector towards sustainable practices.

As financial institutions navigate these murky waters, the evolving relationship between banks and climate initiatives like SBTi raises critical questions about the industry’s commitment to a sustainable future and the delicate balance between economic interests and environmental stewardship.

See: SocGen, ABN Amro and HSBC will no longer seek approval on their climate targets by the SBTi and SBTi’s tailored route to net zero and financed emission reduction for SMEs