The Guidelines apply to NZBA member Banks and Principles for Responsible Banking members
that have selected climate mitigation as one of their priority impact areas. Guidelines will be reviewed at least every three years, and sooner when required.
NZBA is a bank led and UN convened alliance of a group of global banks committed to ambitious climate action. The alliance has > 41% global banking assets. Since 2021 more than 100 banks (Members of NZBA) have set a science based sectoral 2030 target for financed emissions using 1.5 degree scenarios. NZBA members overlap with PRB signatories.
So what does the new guideline offer?
The recent version of guideline for climate target setting for banks includes
Key updates : -
Including capital market (CM) activities in the scope of targets for the first time. For some banks, capital markets arranging and underwriting services provided in the issuance of new debt and equity instruments are their largest source of attributable greenhouse gas emissions. Banks are encouraged to report both facilitated and financed emissions, separately
Updating and clarifying technical language to reflect the evolution of practices, methodologies, and data availability in the last three years, for instance, by updating guidelines on stakeholder engagement and transition planning.
Disclosure of Target coverage
application timeline for new inclusion (CM)
While it asks its members to continue to
A. Maintain level of ambition to meet commitments
B. Meet the commitment
C. Reflect evolution in science, regulation, practice methods and data availability
D. Improve or clarify technical language
Here is a high level summary that provides a structured overview of the guidelines, focusing on actionable items (Whether its mandatory or voluntary nature) along with timeline (hopefully nothing new for you?! if not then please familiarise with it)
This requires upskilling, resources and money to implement. This is a shift in the strategy of a Bank.
Section | Timeline | Implementation Actions | Mandatory/Voluntary |
Guideline One | By 1 November 2025 | Review existing targets to include capital markets activities and set new targets accordingly. | Mandatory |
Ongoing | Set and publicly disclose long-term (2050) and intermediate (2030) targets aligned with a 1.5°C pathway. | Mandatory | |
Annually | Measure and report progress against targets. | Mandatory | |
Within 12 months of target setting | Disclose a high-level transition plan including planned actions and milestones. | Mandatory | |
Every five years | Set further intermediate targets. | Mandatory | |
Within 18 months of signing NZBA | Independently set the first round of targets. | Mandatory | |
Additional 18 months | Set targets for a substantial majority of carbon-intensive sectors detailed in Guideline 1. | Mandatory | |
Capital Markets | By 1 November 2025 | Include capital markets activities in new targets. | Mandatory |
Use of Carbon Credits | Ongoing | Apply evolving leading practices consistent with published standards on the use of carbon credits. | Strongly recommended |
Coverage of Emissions | By 2026 | Include Scope 3 emissions for all sectors where targets are set, where significant and data allow. | Expected (Strongly recommended) |
Disclosures | Ongoing | Be transparent about timeframes, base year, target years, scenarios, methodologies, intermediate targets, and milestones. | Mandatory |
Third-party Assurance | Encouraged ongoing | Obtain third-party independent limited assurance over the reporting on performance against targets. | Encouraged (Optional) |
Guideline Two | Annually | *Banks shall establish an emissions baseline and annually measure and report the emissions profile of their lending, investment and capital markets activities | Mandatory |
Guideline Three | Every five years | *science-based decarbonisation scenarios to set both long-term and intermediate targets * “no-overshoot” or “low-overshoot” scenarios | Mandatory |
Guideline Four | Review Targets every 5 years in context of Climate science relevance | *Prepare to rebase line if targets and boundaries change. As climate science evolves, review methodologies and targets at the earliest practical opportunity *Highest level governance and strategic plan approval | Mandatory |
Comply-or-explain: The guidelines apply on a comply-or-explain basis, meaning banks must make reasonable efforts to meet their commitments or provide an explanation for non-compliance.
Sector-specific targets: Banks are encouraged to set sector-specific targets where relevant scenarios exist and integrate such scenarios in their analysis.
Flexibility in target setting: While banks must set absolute emissions and/or emissions intensity targets, they have flexibility in the methodology used, provided it is credible and transparent.
