Natural environment

The Guidance on Transition Finance provides recommendations and best practices for financial institutions, policymakers, and other stakeholders on how to transition to a low-carbon, sustainable economy. The guidance offers insights into how transition finance can be mobilised to finance projects and activities that facilitate the shift towards environmental sustainability and climate resilience.

Use this resource for the following Actions of Impact Management:

• Set targets and plan: Establish clear and measurable objectives for transition finance initiatives, aligning them with the organisation’s sustainability goals and transition pathways.

The Protocol sets out the UN-convened Net-Zero Asset Owner Alliance Alliance’s approach to target setting and reporting. The first edition of this Protocol focused on the period 2020–2025. This second edition also outlines the ambition towards 2030.

Use this resource to:

• Set targets and plan: Set science-based targets on financed emissions using short-term targets for a 1.5 degree Celsius aligned, net-zero world by 2050. 

The Finance Sector Supplement is a specialised framework, in addition to the Natural Capital Protocol, to guide financial institutions in measuring and valuing natural capital impacts and dependencies across the entities and portfolios that they finance, invest in or underwrite.

This is a cross-cutting resource, meaning that it supports the internal impact management process as a whole, rather than one or a few of the Actions of Impact Management.

Regulation that sets out performance thresholds for organisations to classify their economic activities as “sustainable” according to European policy objectives.

Use this resource to:

• Identify: Find the economic activities that correspond to the financial institution’s activities and review what the taxonomy says about likely impacts on sustainability. This can be an input into identifying sustainability topics to measure. This regulation is based on research connecting economic activities to likely significant impacts on six environmental objectives. Currently, research related to objectives of climate change mitigation and adaptation are most developed.
• Measure, assess and value: Assess whether underlying assets are sustainable. Underlying assets that fall under the taxonomy regulation will report on the portion of their revenue, capital expenditure and operational expenditure that are ‘taxonomy aligned’, and therefore considered a ‘sustainable investment’ according EU policy objectives.
• Set targets and plan: Set objectives for a portion of the portfolio to be ‘taxonomy-aligned’. Regulation provides investors with a set of performance thresholds that have to be met for an underlying asset to be viewed as operating sustainably in relation to one the EU’s six environmental objectives. Underlying assets that are ‘taxonomy aligned’ are generating sustainable outcomes and are therefore also ‘Benefiting stakeholders’.

Guidance that contains disclosure recommendations for information on the material financial impacts of climate-related risks and opportunities, including those related to the global transition to a lower-carbon economy. The TCFD recommendations are structured around the four pillars of Governance, Strategy, Risk Management, and Metrics and Targets.

Use this resource to:

• Communicate: Follow recommendations to structure climate-related financial disclosures. Other voluntary standards can be used in conjunction with TCFD recommendations.

The EU Climate Transition Benchmarks (CTB) and Paris-Aligned Benchmarks (PAB) are examples of portfolio impact benchmarking techniques being employed in regulation. The regulation sets out requirements for index providers to construct investable indexes that are on a 7% decarbonisation trajectory.

Use this resource to:

• Measure, assess and value: Review EU’s proposed approach for establishing benchmarks, which incorporates greenhouse gas emissions at portfolio level. A climate benchmark serves as an investment performance benchmark for GHG emission-related strategies; an engagement tool and a policy benchmark to help guide strategic asset allocation.

The Financial Sector Science-Based Target Guidance helps financial instituions to set science-based targets related to climate.

Use this resource for the following Actions of Impact Management:

• Set Targets and plan: Set a portfolio target for greenhouse gas emissions.

The Natural Capital Protocol is a framework designed to help businesses identify, measure, and value their impacts and dependencies on natural capital. It provides a standardised approach for organisations to integrate natural capital considerations into their decision-making processes, enabling them to better understand and manage their relationship with nature.

This is a cross-cutting resource, meaning that it supports the internal impact management process as a whole, rather than one or a few of the Actions of Impact Management.

This guide briefly introduces a leading methodology for translating planetary thresholds related to greenhouse gas emissions into company-specific targets. It also provides further links to more detailed implementation guidance.

Use this resource for the following Actions of Impact Management:

• Set targets and plan: Set a company-specific target for greenhouse gas emissions that incorporates an ecological threshold for a given global warming scenario.

This guidance helps organisations to set nature-related science-based targets. More generally, SBTn is embarking on a multi-year strategy to develop guidance for translating planetary thresholds and societal goals into company-specific targets for air, water, land, biodiversity and ocean.

Use this resource for the following Actions of Impact Management:

• Set targets and plan: Set a company-specific target that references an ecological threshold for nature.