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New umbrella group for net-zero finance initiatives launches

21 April 2021

On the eve of US President Joe Biden's Leaders Summit on Climate, the United Nations announced the launch of a global alliance that brings together all net-zero finance initiatives into one strategic forum, the Glasgow Financial Alliance for Net Zero (GFANZ).

GFANZ was launched in London by Mark Carney, UN Special Envoy on Climate Action and Finance, and John Kerry, US Special Presidential Envoy for Climate. Carney will chair the alliance, which brings together 160 banks and financial institutions with more than $70 trillion in assets to accelerate the transition to a low-carbon economy.

"The Glasgow Financial Alliance for Net Zero will work to mobilize the trillions of dollars necessary to build a global zero-emissions economy and deliver the goals of the Paris Agreement," the secretariat of the UN Framework Convention on Climate Change said 21 April. "All initiatives in GFANZ require signatories to set science-aligned interim and long-term goals to reach net zero no later than 2050."

The forum is named after the Scottish city of Glasgow, which will host the 2021 UN Climate Change Conference, known as COP26, in November.

"This is the breakthrough in mainstreaming climate finance the world needs," said Carney, the former head of the Bank of England and before that the Bank of Canada. "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."

Bank of America, Barclays, BNP Paribas, Citi, HSBC, Lloyds, Morgan Stanley, Santander, and UBS are among the 43 banks signed up for GFANZ as members of the Net-Zero Banking Initiative. Citi CEO Jane Fraser will speak at the climate leaders' summit on 22 April, as will directors from the World Bank, International Monetary Fund, and African Development Bank.

According to the UN, the banks have pledged to:

  • Transition the operational and attributable GHG emissions from their lending and investment portfolios to align with pathways to net-zero by 2050 or sooner.
  • Within 18 months of joining the alliance, set 2030 targets (or sooner) and a 2050 target, with intermediate targets to be set every five years from 2030 onwards.
  • Focus their 2030 commitments on priority sectors with the most intensive GHG footprints within their portfolios.
  • Within 36 months of joining, set a further round of sector-level targets for all or a significant majority of specified carbon-intensive sectors, including: agriculture; aluminum; cement; coal; commercial and residential real estate; iron and steel; oil and natural gas; power generation; and transportation.
  • Engage with their clients' energy transitions and decarbonization.
  • Publish absolute emissions and emissions intensity in line with best practice.
  • Take a robust approach to the role of offsets in transition plans.

Kerry said the world's largest financial players now recognize energy transition represents a vast commercial opportunity. "The large sums these institutions are dedicating to climate solutions reflect a growing understanding that the transition to a low-carbon global economy will be critical for their business models," Kerry added.

Reporting by Abdul Latheef, OPIS.

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