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COP26: Mark Carney declares a 'watershed' moment as $130tn committed to hitting net zero

4 Nov 2021
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COP26: Mark Carney declares a

Mark Carney, the British Prime Minister Boris Johnson's Finance Adviser for COP26 and the UN Special Envoy for Climate Action and Finance at the COP26 U.N. Climate Summit in Glasgow, Scotland, Wednesday, Nov. 3, 2021. The British government plans to make the U.K. 'the world's first net-zero aligned financial center' as companies and investors seek to profit (Keystone/ AP Photo/Alberto Pezzali)

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Finance institutions make big promises at Cop26

by Kasmira Jefford

Banks, insurers and asset managers with over $130 trillion of assets have now signed up to hit net zero targets by 2050, UN climate and finance envoy Mark Carney announced on Wednesday as he presided over the third day of Cop26 focused on deciphering the trillions of dollars needed to fight the climate crisis.

More than 450 firms representing 40 per cent of the world’s financial assets now belong to the Glasgow Financial Alliance for Net Zero (GFANZ) compared with 160 when it was launched in April, according to its latest progress report released yesterday.

Carney said these companies stand ready to deliver $100 trillion, or 70 per cent, of the estimated finance needed to help countries reduce emissions over the next three decades and limit global warming.

“Make no mistake; the money is here if the world wants to use it,” Carney told the audience at Glasgow, adding that more needs to be done to connect private finance with Paris-aligned projects.

“Essential changes to the plumbing of finance can move, and are moving, climate change from the fringes to the forefront and transforming the financial system in the process.”

Launched in April and comprises six different groups from the financial sector, including the $63 trillion Net-Zero Banking Alliance (NZBA), hosted by the United Nations Environment Programme Finance Initiative (UNEP FI) in Geneva.

Signatories must commit to complying with science-based guidelines set out in the Paris agreement and have to communicate each year about their progress and the programmes they fund.

Over 90 of the founding institutions have already delivered on setting short-term targets, including 29 asset owners that plan on reducing portfolio emissions by up to 30 per cent by 2025, according to GFANZ’ latest progress report published Tuesday.

Overall, their commitments now exceed $130 trillion  – up from $5 trillion when the UK and Italy assumed COP26 Presidency, Carney said.

Where’s the commitment to halt fossil fuel investment?

Despite the big numbers, critics were not easily won over. According to a report released on Tuesday by NGO Reclaim Finance, none of the net-zero alliances that make up GFANZ requires them to halt investments in fossil fuel expansion.

Separate findings by Insure our Future, a campaign advocating for the industry to stop insuring fossil fuels, showed that only three of the top 30 insurers surveyed had adopted policies to stop coverage for much or all new oil and gas production projects.

Patrick McCully, a senior analyst at Reclaim Finance and author of the report, said: “COP26 must signal a turning point for GFANZ and its members: away from foot-dragging and towards an end to financial support for fossil fuel expansion. If this really is the ‘finance COP’, Mark Carney & co need to lead from the front.”

Steve Trent, CEO of the Environmental Justice Foundation, said the headline statements contained some “deeply worrying loopholes”.

“While it seems laudable that the plans submitted must include targets to mitigate climate risk, interim goals, and measures to meet them, this sadly means nothing because there is no obligation to achieve net-zero, and no ban on investing in carbon-heavy activities,” he added in a statement on the NGO’s website.

GFANZ said it has strengthened its commitments to include “accelerating the phase-out of fossil fuels in line with the science”, however, McCully said “the jury was still out” on whether these goals will be achieved.

UN chief António Guterres has weighed in by announcing on Monday a watchdog to analyse net zero commitments from non-state actors.

An alphabet soup of finance initiatives

The announcement by big investors came amid a raft of new commitments and proposals at Cop for how to encourage more private as well as public sector money towards projects that will help countries to decarbonise and adapt to climate change.

Several panellists made reference to the “alphabet soup” of financial acronyms that Glasgow participants had to wade through on Wednesday. Among them was the launch of the International Sustainability Standards Board (ISSB), tasked with creating a single set of standards to tackle greenwashing by companies.

Geneva was among the cities vying to host the European headquarters of the new board, with Frankfurt ultimately selected.

The World Business Council for Sustainable Development (WBCSD), a chief executive-led organisation of 200 international companies based in Geneva, called for new “corporate determined contributions” to be established to track how the private sector is living up to its commitments to limit global warming, in a manifesto published yesterday.

“At present, there is no common mechanism in place to measure progress in the private sector,” said Claire O’Neill, senior advisor for climate & energy at WBCSD and former COP26 president-designate.

This was echoed by Larry Fink the chief executive and chairman of the world’s largest money manager Blackrock, who said that pressure on public companies to report on their emissions, while less focus was put on private companies, was creating “the biggest capital markets arbitrage” of his lifetime.

He also criticised the number of public oil companies being sold to private enterprises away from the reporting limelight.

“If we are serious about this, instead of the convenience of public entities, of public reporting, we have to ask all of society to move forwards or else we are lying to ourselves, we will not get to a net zero,” he told a panel.

Missing climate finance: the elephant in the room

As world leaders left Glasgow, finance ministers continued to meet behind closed doors to discuss more detailed action and also how to plug the climate finance gap promised by rich countries to developing nations.

However, the world’s countries most impacted by climate change, despite contributing the least to it, expressed their frustration.

Speaking at a press conference yesterday, Sonam Phuntsho Wangdi of Bhutan, chair of the 46-strong Least Developed Countries (LDCs) Group, said the progress so far at Cop was “disappointing and in a way also frightening”.

“A commitment of $100bn per year was made a decade ago and it is still not being delivered… we cannot wait any longer.”

He asked governments and big emitters to “stop skirting responsibility” and address the crisis.



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