The Use of Carbon Credits in Climate Target Setting

To support Net-Zero Banking Alliance (NZBA) member banks in developing targets, the Alliance has developed this short paper to provide clarification on the already-published Guidelines for Climate Target Setting for Banks outlining how the Alliance views the treatment of offsetting in relation to member commitments. The Alliance expects that any carbon credits utilized are consistent with the sectoral decarbonization pathway of a selected climate scenario. Only carbon credits for which clients or the bank have provided evidence that they meet overall quality principles are considered eligible. Any inclusion of client-attributed carbon credits should be reported by the banks. NZBA is the flagship climate initiative under the Principles for Responsible Banking to accelerate science-based climate target setting and develop common practice. As the banking alliance within the global efforts on net zero across the finance industry brought together under GFANZ, the NZBA is open to all banks globally, including banks that are not UNEP FI members and Principles for Responsible Banking signatories.