Emerging Practice: Climate Target Setting for Oil & Gas Sector Financing

Year Published

2024

Contributing Organizations

United Nations Environment Programme Finance Initiative (UNEP-FI)

Net Zero Banking Alliance (NZBA)

Type of Resource

Research/Insights Report

Languages

English

Relevant Topics

Core Topic

Energy Generation

Topic 2

Target Setting

Topic 3

Banking

Target Audience

Banks

Relevant Geography

Global

Resource Description

This resource outlines emerging practices for banks setting climate targets in oil and gas financing. It explores key design choices—such as emissions scope, metrics, attribution, and benchmarking—to help banks align portfolios with a 1.5°C pathway, assess progress, and operationalize climate strategies without prescribing specific approaches.

Why This Matters

Financial institutions play a critical role in shaping the oil and gas sector’s transition. Clear, science-aligned, and consistent target-setting approaches are essential to manage transition risk and align portfolios with net-zero. This resource helps clarify current practices and gaps to inform future target development.

Key Insights

Climate targets for oil and gas financing vary significantly in scope, design, and ambition
Institutions use a mix of absolute, intensity, and capital alignment targets, applied to different parts of their portfolios
Challenges include inconsistent data, lack of standards, and differing interpretations of transition pathways
Target-setting approaches include engagement-led strategies, lending exclusions, and portfolio decarbonization
Offers comparative insights into methodologies such as PACTA, NZBA, and SBTi-FI, and their limitations in oil and gas