A global alliance bringing together existing and new net-zero finance initiatives into a single sector-wide strategic form was launched today by high-level UK, UN and US figures.
Mark Carney, the UK prime minister’s finance advisor for COP26 and UN special envoy for climate action and finance, plus US presidential climate envoy John Kerry and Janet Yellen, Treasury Secretary, are among those named as involved in the launch, which comes on the eve of US president Joe Biden’s climate leaders summit.
The new forum, dubbed the Glasgow Financial Alliance for Net Zero (GFANZ), unites the UN-convened Net-Zero Asset Owner Alliance and the newer Net-Zero Asset Managers initiative.
As of today the latter counts the world’s three largest asset managers among its ranks, with State Street Global Advisors announcing its commitment alongside 13 others – BlackRock and Vanguard were among a group of new joiners in March.
The new sector-wide finance alliance also covers a fresh banking initiative, with the Net-Zero Banking Alliance launching today with an initial cohort of 43 banks. A counterpart for insurers and reinsurers is due to be launched soon, and will also be convened by the United Nations.
According to today’s announcement about the new financial alliance, it will “provide a forum for strategic coordination among the leadership of finance institutions from across the financial sector to accelerate the transition to a net-zero economy”.
This would include advocating for public policy that supports such a transition, and supporting technical collaboration on “substantive and cross-cutting issues that will accelerate the alignment of investment and lending with net-zero”.
Carney said the launch of the new alliance was “the breakthrough in mainstreaming climate finance the word needs”.
“Most fundamentally, GFANZ will act as the strategic forum to ensure the financial system works together to broaden, deepen, and accelerate the transition to a net-zero economy,” he said.
At campaign group WWF UK, chief executive Tanya Steele said it was positive to see leading financial institutions come together to embrace the need to align with net-zero, but that “the sector as a whole has a long way to go, as it is currently financing vast amounts of harmful emissions both at home and overseas”.
“We need to see ambition translated into near-term action, including interim targets and clear steps to achieve net-zero in line with 1.5°C warming to avoid dangerous climate change,” she added.
“WWF is calling on the UK government and financial regulators, who also have a critical role to play in this journey, to set legally binding standards, enforce implementation, and drive action at pace.”
More and more asset owners are aiming to reduce the emissions in their investment portfolios to net-zero. For members of the UN-convened Net-Zero Asset Owner Alliance, the task at hand is to set and disclose interim targets for 2025.
The Church Commissioners for England, for example, did just that today, announcing a goal to reduce the carbon intensity of its public equities and real estate portfolio by 25% by 2025, with other asset classes to be added “as methodologies adapt and reliable data develops”.
In a statement, the Commissioners said they hoped that “in addition to reducing emissions within the portfolio, true indicators will be seen on the path to the decarbonisation of the real economy”.
Think tank 2° Investing Initiative is aiming to help financial institutions design climate-related strategies that are also impact strategies – contributing to greenhouse gas emissions reductions – and today released for consultation a management system designed with that purpose in mind. It is inviting feedback and testing by 7 June.
Net-zero: from talk to action?
Tune in to IPE’s ESG Forum to hear leading asset owners and others talk about what net-zero means for them. Our first full-day ESG Forum took place on Wednesday, 21 April, with all sessions available to watch on demand. Sign in or register here.