The new framework provides science-backed, actionable guidance for banks, asset owners and managers, private equity firms, insurers, and capital markets actors to align their financial activities with climate goals. It enables institutions to play a leading role in limiting global warming and achieving net-zero greenhouse gas (GHG) emissions by 2050 or sooner.
“Financial institutions have the ability to play a transformative role in the transition to net-zero,” said Alberto Carrillo Pineda, Chief Technical Officer at the SBTi, in the July 2025 release. “Their influence on the global economy and ability to engage with their portfolios is unparalleled to accelerate the net-zero transition. This robust, science-based Standard will help financial institutions drive the net-zero transformation all over the world.”
The Standard builds on SBTi’s Corporate Net-Zero Standard and Near-Term Criteria for financial institutions, but for the first time integrates both near- and long-term requirements tailored to the unique activities and emissions challenges of the financial sector. The framework supports a broad set of financial activities, including:
Institutions are required to set near-term targets (within five years) and long-term targets for 2050 or earlier. These targets must be science-based and grounded in transparent GHG inventories. Portfolio alignment is emphasized over divestment—institutions are encouraged to engage with high-emitting sectors and help transition them toward net-zero.
Some of the key innovations and requirements in the 2025 version include:
“The engagement-first approach sets a new bar for the financial industry,” said the SBTi in the published Standard. “Rather than immediate divestment, we emphasize transition strategies that finance solutions, shift capital, and deliver real-world emissions reductions.”
The Standard was developed over a four-year process, including two public consultations and pilot testing by over 30 financial institutions. It has already generated widespread interest, with 135 institutions across six continents committing to the framework ahead of its launch.
Importantly, the Standard is interoperable with existing tools and standards, including:
During the transition phase—effective until December 2026—institutions can choose to validate targets under either the Near-Term Criteria or the new Net-Zero Standard. Starting January 2027, the Net-Zero Standard will become the required framework for both near- and long-term target validation.
Financial institutions are encouraged to begin the validation process by registering with SBTi Services, a wholly owned subsidiary managing the formal validation process.
As investor pressure, regulatory scrutiny, and climate-related risks continue to mount, this Standard offers financial institutions the structure and credibility needed to meet evolving expectations and demonstrate leadership in a decarbonizing global economy.
