Banks’ decarbonization targets for the power sector can be a useful tool—provided they meet several key criteria. For example, decarbonization targets should be based on physical (rather than financial) intensity targets, they should also be aligned with credible calculations of the sectoral efficiency improvements needed to match the absolute emissions pathways in 1.5°C scenarios, and they should include scope 3 emissions in addition to scope 1.

However, well-designed and ambitious decarbonization targets are only one part of a robust climate transition plan for banks. Robust transition plans should also include policies to end financing for new fossil fuel projects and the companies developing them, plans to finance the decommissioning of existing fossil fuel infrastructure, and targets to significantly increase financing for sustainable power supply. The Sustainable Power Policy Tracker assesses this focus on sustainable power supply financing.

Find out more in Reclaim Finance’s full analysis of banks’ decarbonization targets.