TARGETING NET ZERO

Reclaim Finance analyzes 243 sectoral targets from 30 global banks, concluding that most are ineffective due to flawed methodologies, partial coverage, and a lack of transparency. The report specifically criticizes the use of PCAF attribution factors, which can make emissions appear to drop even if real-world emissions remain flat. It recommends shifting toward targets based on financing volumes for fossil fuels, absolute sectoral portfolio emissions, and physical intensity for industrial sectors to drive genuine decarbonization.

• The widespread use of the Partnership for Carbon Accounting Financials (PCAF) attribution factor creates a 'false sense of precision' and allows banks to meet targets without real-world emission cuts because attributed emissions can fall if the market value of companies in a portfolio increases.
• Most existing bank targets are ineffective; only two current types are deemed likely to drive decarbonization: sectoral portfolio financing volume (SPFV) targets for fossil fuel supply and weighted average physical intensity (WAPI) targets for high fossil fuel demand sectors.
• There is a significant gap in the coverage of capital markets activities; only six of the 30 analyzed banks have targets that at least partially cover facilitated emissions, and all such targets use an attribution factor.
• Bank targets often lack comprehensive scope coverage, with only about one-fifth of the 243 analyzed targets covering all three emission scopes (Scope 1, 2, and 3).
• The report identifies a lack of transparency and consistency in target design, noting that the NZBA's guidelines are filled with 'loopholes and ambiguity' and that it is often impossible to evaluate if targets are truly aligned with 1.5°C scenarios.
• Many banks allow the use of carbon offsets to meet interim targets, which the report argues renders targets out of alignment with 1.5°C because offsets do not reliably represent actual emission reductions.
• Reclaim Finance recommends the adoption of Absolute Sectoral Portfolio Emissions (ASPE) targets, which sum all emissions from companies in a portfolio without using attribution factors, to provide a direct reflection of real-world emissions.
• The report suggests that corporate capital expenditure (capex) plans are a superior indicator of a company's emissions trajectory compared to stated aspirations or current emission metrics.

APA

McCully, P., & Etienne, C. (2024). TARGETING NET ZERO. Reclaim Finance. https://reclaimfinance.org/site/wp-content/uploads/2024/09/Targeting-Net-Zero-Report.pdf

Chicago

McCully, Paddy, and Christophe Etienne. TARGETING NET ZERO. Reclaim Finance, 2024. https://reclaimfinance.org/site/wp-content/uploads/2024/09/Targeting-Net-Zero-Report.pdf.

Wikipedia

{{cite report |last1=McCully |first1=Paddy |last2=Etienne |first2=Christophe |title=TARGETING NET ZERO |publisher=Reclaim Finance |date=September 2024 |url=https://reclaimfinance.org/site/wp-content/uploads/2024/09/Targeting-Net-Zero-Report.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{mccully2024targeting, author = {McCully, Paddy and Etienne, Christophe}, title = {{TARGETING NET ZERO}}, institution = {Reclaim Finance}, year = {2024}, month = sep, url = {https://reclaimfinance.org/site/wp-content/uploads/2024/09/Targeting-Net-Zero-Report.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }