SBTi FINZ requires a fossil fuel transition policy: no coal expansion finance, no project finance for new oil and gas expansion, and no corporate finance to expanders by 2030.
The Science Based Targets initiative’s Financial Institutions Net-Zero Standard (FINZ) version 1.0, July 2025, is usually discussed as a technical target setting exercise. Inside it sits a set of commitments that are not technical at all.
Criterion C9 requires a published fossil fuel transition policy before initial validation, and that policy must commit to:
- an immediate stop to new finance for coal expansion, whether project finance or general-purpose finance to coal companies
- an immediate stop to new project finance for new oil and gas expansion: new upstream fields and new LNG infrastructure
- an end to new general-purpose finance to companies involved in oil and gas expansion, immediately or by 2030 at the latest
For a bank in a hydrocarbon economy, that is a strategic commitment with direct consequences for existing client relationships and future pipeline. It is worth reading carefully before anyone signs up to validation.
Why this gets missed
Transition planning programmes usually arrive framed as disclosure work. A regulator asks for climate risk management, a lender or an index asks for a plan, and SBTi validation gets added to the scope as a credibility marker.
Read that way, FINZ looks like a methodology choice. It is not. Validation under the standard carries conditions about what the institution will and will not finance, and those conditions bind commercial decisions rather than reporting ones.
The sequence that causes problems is: commit to validation, build the baseline, agree the target architecture, and only then discover that a condition of validation conflicts with a significant part of the existing book or the pipeline the business is counting on.
What the policy commits to, read plainly
The policy itself. It is published before initial validation. It defines which coal, oil and gas projects and companies are in scope and explains any permitted exclusions, such as finance dedicated to permanent decommissioning, carbon capture that meets the standard’s conditions, or activities a law requires. SBTi publishes an optional template.
Coal expansion, immediately. No new finance for new coal mines, coal mine extensions or new unabated coal power. This covers general-purpose finance to coal companies as well as project finance.
Oil and gas expansion projects, immediately. No new project finance for new upstream fields or new LNG infrastructure that reaches a final investment decision after the policy is published. Not phased, not on a trajectory. This is the commitment most likely to bite a project finance desk in the short term.
Oil and gas companies that are expanding, by 2030 at the latest. No new general-purpose finance to companies involved in new oil and gas expansion, with the date stated in the policy. This reaches further than project finance, because it is framed around the counterparty rather than the transaction. Corporate lending, and depending on structure other exposures, come into view. Working out what it captures in your own book is a portfolio analysis exercise, and it is worth doing before rather than after.
This is not an argument against transition planning
It is an argument for sequencing the decision properly.
A bank can build a serious, defensible climate transition plan without validating under FINZ. The IFRS Foundation guidance published in June 2025 is the current authority on transition plan disclosure, and a plan built to it stands on its own. SBTi validation is one route to credibility, not the only one, and the driver for a transition plan is usually a regulator, a lender or an index rather than SBTi itself.
What does not work is committing to validation as a headline and discovering the conditions later.
The order we would recommend
- Read the three commitments against your actual book. Which exposures does each one touch, and how material are they?
- Take the answer to the board before committing. This is a strategy decision about the institution’s direction, not a sustainability team decision.
- Decide whether FINZ is the right instrument for where the bank is going. If it is, commit properly. If it is not, build the transition plan to the IFRS Foundation guidance and be equally rigorous about it.
- Then start the baseline, which is the long pole either way.
A caveat worth stating
SBTi versions move quickly and the documents do not always make clear which supersedes which. Everything above reflects FINZ version 1.0 as at 28 August 2026. Confirm the current position, and the precise scope of each commitment, against the standard and the SBTi website before acting on it. If an engagement turns on a particular criterion, verify it directly.
How ESGweise helps
We run the portfolio analysis that tells a bank what these commitments would actually cost it, before it commits, and we build transition plans to the current IFRS Foundation guidance whether or not SBTi validation is part of the plan. See our ESG strategy service and our banking and financial services practice.
To test FINZ against your own book, talk to us.
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Frequently asked questions
Does SBTi FINZ require banks to stop financing fossil fuels?
Not all fossil fuel finance. Criterion C9 of the Financial Institutions Net-Zero Standard (V1.0, July 2025) requires a published fossil fuel transition policy that commits to three things: an immediate stop to new finance for coal expansion, an immediate stop to new project finance for new oil and gas expansion projects, and an end to new general-purpose finance to companies involved in oil and gas expansion, immediately or by 2030 at the latest. Existing exposures and finance for decommissioning are treated differently. These are conditions of validation, so they should be tested at board level before an institution commits.
What is a fossil fuel transition policy?
It is the published policy FINZ criterion C9 requires before initial validation. It must define the coal, oil and gas projects and companies in scope, explain any permitted exclusions (for example finance dedicated to permanent decommissioning, or activities required by law), and set out the three cessation commitments on coal expansion, oil and gas expansion projects, and general-purpose finance to expanding oil and gas companies. SBTi publishes an optional template for it.
Does this apply to all lending, or only project finance?
It depends on the fuel. For coal expansion, the immediate stop covers both project finance and general-purpose finance to coal companies. For oil and gas, the immediate stop covers project finance for new expansion projects only; general-purpose finance to companies involved in oil and gas expansion can continue until 2030 at the latest, and the policy must state the date. That distinction is what drives the portfolio analysis for a Gulf bank.
Can a bank in a hydrocarbon economy realistically meet this?
That is the question to answer before committing, not after. It depends on the composition of the existing book, the pipeline, and how central hydrocarbon clients are to the institution's strategy. Some banks will conclude the commitment is compatible with where they are heading. Others will conclude that validation under FINZ is not the right instrument for them, and there are other credible routes to a transition plan. Neither answer is wrong, but the analysis should come first.