What FINZ Asks of Banks on Fossil Fuel Finance
SBTi's FINZ standard requires a fossil fuel transparency policy, an immediate stop to new fossil project finance, and an exit from financing oil and gas expansion 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.
FINZ requires:
- a fossil fuel transparency policy
- an immediate end to project financing for new fossil fuel projects
- an end to financing oil and gas companies engaged in expansion by 2030
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.
The three commitments, read plainly
A fossil fuel transparency policy. A published position on fossil fuel financing, stated openly rather than left implicit. Confirm the specific drafting expectations against the standard.
No project financing for new fossil fuel projects, immediately. Not phased, not on a trajectory. This is the commitment most likely to bite a project finance desk in the short term.
No financing of oil and gas companies engaged in expansion, by 2030. This one 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?
FINZ requires an immediate end to project financing for new fossil fuel projects, and an end to financing oil and gas companies engaged in expansion by 2030. It also requires a fossil fuel transparency policy. These are conditions of validation under the standard rather than optional guidance, which is why they should be tested at board level before an institution commits.
What is a fossil fuel transparency policy?
Under FINZ, a published policy setting out the institution's position on fossil fuel financing. The point is that the position is stated openly rather than left implicit in lending decisions. Confirm the current drafting expectations against the standard itself, because the requirement is specific.
Does this apply to all lending, or only project finance?
The immediate prohibition is framed around project financing for new fossil fuel projects. The 2030 commitment is framed around financing oil and gas companies engaged in expansion, which reaches corporate lending rather than project finance alone. The distinction matters for portfolio analysis and is worth confirming carefully against the standard for your own asset classes.
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.