The US Treasury has released new guidelines to make sure financiers’ net-zero commitments are supported by “credible” targets.
The Treasury issued the proposed regulations on Tuesday with the goal of ensuring that organisations like banks truly achieve the 1.5C global temperature increase limit.
The guidelines “are being released in the context of extensive actions taken by the Biden-Harris administration to reduce emissions in the face of the increasingly serious climate crisis,” the department noted.
They will make it possible for communities, workers, non-financial businesses, and financial institutions to gain from the emerging clean energy economy.
The nine-point agenda, which was unveiled while world leaders and employers gathered at the UN General Assembly in New York, included transparency and disclosed plans as crucial components.
Speaking to people like Larry Fink of BlackRock and Noel Quinn of HSBC, Treasury Secretary Janet Yellen stated that the regulations might establish shared standards for businesses.
Although adhering to the principles is obviously optional, many people in this room are already doing so, or are currently doing so, in a way that is consistent with some of the best practises, she explained.
“For those who haven’t, we believe they can be helpful in defining what to take into account,”
The net-zero commitment of a financial institution signals its intention to reduce greenhouse gas emissions. Treasury advises that pledges be made in a way that keeps the rise in the average world temperature to a maximum of 1.5°C. This declaration must be supported by the creation and implementation of a net-zero transition plan in order to be taken seriously.
When considering how to carry out their commitments, financial institutions should take transition financing, controlled phaseout, and climate solutions practises into account.
Financial institutions should set up reliable measures and targets and work towards establishing long-term metrics and targets for all pertinent advice, investment, and financing services.
Financial institutions should evaluate whether their clients and portfolio companies are on track to meet their goals and limit the rise in the world’s average temperature to
Financial institutions should match their promises to their engagement practises with customers, portfolio companies, and other stakeholders.
Financial institutions should create and implement an implementation strategy that incorporates the commitments’ objectives into pertinent areas of their operations.
Financial institutions should set up strong governance procedures to oversee how their obligations are carried out.
Financial institutions should take environmental justice and environmental implications into consideration when carrying out the tasks outlined in their net-zero transition plans, if appropriate.
Financial institutions should be open and honest about their goals and the steps they are taking to achieve them.