The U.S. Treasury announced the publication of its new “Principles for Net-Zero Financing & Investment,” aimed at establishing a set of best practices, and promoting consistency and credibility for private sector financial institutions in making and pursuing net zero commitments.
Introduced as voluntary principles, the new publication focuses primarily on financial institutions’ Scope 3 financed and facilitated greenhouse gas (GHG) emissions, which typically account for the vast majority of financial firm’s carbon footprint.
According to a statement, the Principles come as a “massive economic shift” is underway, driven by the climate crisis, resulting in increasing demand for greenhouse gas (GHG) emissions reduction technologies, products and services, clean energy, and climate adaptation solutions across sectors. While these shifts are fueling the growth of new industries and business models, the Treasury added, building these new industries will require “a private financial system that allocates increasing amounts of capital and expertise to the companies and people building this new clean energy economy.”
The statement added: “The Principles that Treasury is unveiling are intended to support this growth.”
The publication includes 9 Principles, which establish that net zero goals set by financial institutions should be in line with the goal of limiting the increase in global average temperature to 1.5°C, and that the goals should be accompanied by a net zero transition plan. Financial institutions are also guided to establish credible metrics and targets for all relevant financing, investment, and advisory services, to align their engagement practices with client and portfolio companies with their net zero commitments, and to be transparent about their goals and progress towards them.
Source: U.S. Treasury Releases Principles for Net Zero Commitments by Financial Institutions – ESG Today
About the Authors
Associate Director, Investment Banking
Prachurjya has over 16 years of experience in investment banking with Acuity Knowledge Partners. At Acuity, he has led sector and product-specialist pilot teams across Capital Markets, ESG, Debt Advisory, Loan Syndications, Metals & Mining and Real Estate. He has been actively involved in setting up and on-boarding new ESG Advisory, ESG DCM and Sustainable Finance teams for various bulge bracket investment banks. Within DCM and Rating Advisory, he has been instrumental in helping the clients achieve over 30% in annual savings on both regular and adhoc tasks through standardization of the outputs and deployment of our proprietary BEAT tools.
Delivery Manager, Investment Banking
Puja has 7 years of extensive experience in ESG, Climate Change & Sustainability and she is supervising the ESG team at Acuity. She also has diverse experience in conducting ESIA, EHS compliance audits, ESG Risks and Controls, EHS & ESG Due Diligence assessments. Prior to joining Acuity, she was working with companies like KPMG Global Services, EY India and ERM India. She has expertise in provisioning extensive research requirements for clients through preparation of Peer Benchmarking, Target Compilation, Sustainability report, Sustainable Finance Updates and Sectoral ESG Thematic Detailing Engagement.
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