On 19 January 2023, Science Based Targets (SBTi) published financial sector and TCFD reporting guidance.

The SBTi guidance considers climate impact by using backward looking emission-based metrics to quantify financed emissions alongside forward-looking target-based metrics to identify carbon intensive holdings and evaluate alignment to 1.5°C plans and pathways.  The Task Force on Climate Related Financial Disclosures (TCFD) recommendations focus on the climate risks and opportunities a financial institution, its portfolios and underlying assets are exposed to.

The purpose of the guidance is to set out suggested pathways for financial institutions who want to adopt either or both frameworks.

The guidance details the overlaps between the frameworks and further describes the harmonization inherent in setting credible science-based targets and preparing robust climate-related risk and opportunity disclosures.

The guidance provides a step-by-step guide for financial institutions that have:

  1. No existing alignment with either framework.
  2. Committed to the SBTi but are not disclosing in line with the TCFD.
  3. Disclosed in line with the TCFD but not committed to the SBTi.