Emerging Practice: Climate Target Setting for Oil & Gas Sector Financing

This resource outlines design choices for banks setting climate-related targets in oil and gas sector financing. It aims to help banks and bankers that are looking to align their respective oil & gas (O&G) lending and investment portfolios with a 1.5°C pathway by providing an overview of emerging practices in setting, measuring, and monitoring progress of climate targets for those portfolios. It evaluates the strengths and weaknesses of different target-setting approaches including the design choices banks face when defining the scope of emissions, types of counterparties, target metrics, attribution methods, and benchmarking as well as provides suggestions for the operationalisation of chosen approaches. The paper does this by providing an overview of emerging practices, common challenges and policy, data, and other gaps. It focuses on emissions reductions without prescribing specific approaches.