GFANZ Glasgow Financial Alliance for Net Zero reports?
Capital committed to net zero now at over $130 trillion, up from $5 trillion when the UK and Italy assumed COP26 Presidency
Today, through the Glasgow Financial Alliance for Net Zero (GFANZ), over $130 trillion of private capital is committed to transforming the economy for net zero.1 These commitments, from over 450 firms across 45 countries, can deliver the estimated $100 trillion of finance needed for net zero over the next three decades.
To support the deployment of this capital, the global financial system is being transformed through 24 major initiatives for COP26 that have been delivered for the summit. This work has significantly strengthened the information, the tools and the markets needed for the financial system to support the transformation of the global economy for net zero.
New analysis, commissioned by the UN High Level Climate Action Champions, finds that the private sector could deliver 70% of total investments needed to meet net zero goals.2
In its progress report published today, GFANZ announces that financial sector commitments to net zero now exceed $130 trillion, a 25-fold increase under the UK and Italian Presidency.3
Now firms across the entire financial spectrum – banks, insurers, pension funds, asset managers, export credit agencies, stock exchanges, credit rating agencies, index providers and audit firms – have committed to high ambition, science-based targets, including achieving net zero emissions by 2050 at the latest, delivering their fair share of 50% emission reductions this decade, and reviewing their targets towards this every five years. All firms will report their progress and financed emissions annually.
The progress report also outlines the ambitious body of work underway – led by GFANZ CEOs – to address some of the biggest climate finance challenges, including defining net zero pathways for carbon-intensives sectors, aligning on what constitutes a robust transition plan for corporates and financial institutions, and a sector-wide plan to mobilise capital needed for decarbonisation in emerging markets. Collectively, this work will accelerate the implementation of net zero commitments and help to rapidly scale capital flows to support the net zero transition.
It comes as UK Chancellor, Rishi Sunak, announced today new requirements for firms to publish net zero transition plans setting out how they will decarbonise through 2050. This follows calls from GFANZ for G20 countries to implement policies to unlock and accelerate capital to support the transition, including mandatory net zero transition plans.4
Already, firms are turning ambition into action that will align their portfolios with 1.5°C. Over 90 of the founding institutions of GFANZ have already delivered on setting short-term targets, including 29 asset owners that have committed to reducing portfolio emissions by 25-30% by 2025, as well as 43 asset managers that have published targets for 2030 or sooner.5 And the first targets have also been published by Net Zero Banking Alliance members.
The 24 other major finance initiatives, led by Mark Carney as part of the private finance priorities for COP26, will help transform the financial architecture by mainstreaming and scaling: climate-related reporting; climate risk management; climate-related investment returns and the mobilisation of private finance to emerging and developing economies.6
Today, the IFRS Foundation, the international accounting standard body, announces the establishment of a new International Sustainability Standards Board to develop globally consistent climate and broader sustainability disclosure standards for the financial markets. This work has been welcomed by Finance Ministers from over 40 countries stretching across 6 continents and follows support from the G7 and others to make climate disclosures mandatory.
Through the work of the Network for Greening the Financial System climate risk management is also being transformed. Thirty-eight central banks, in countries comprising 67% of the world’s emissions, have committed to climate-related stress tests to review the resilience of the world’s largest financial firms in the face of several climate-related risks. And 33 central banks and supervisors, representing 70% of the world’s emissions, have committed to issuing guidance to firms on managing climate-related financial risks.
And to measure more accurately the alignment of lending, investment and underwriting with net zero, the Taskforce on Climate-related Financial Disclosures (TCFD) has published guidance on metrics, targets and transition plans.
Finally, for COP26, GFANZ Co-Chair Mark Carney is publishing a new plan on how to scale private capital flows to emerging and developing economies. This includes the development of country platforms to connect the now enormous private capital committed to net zero with country projects, scaling blended finance through MDBs and developing high integrity, credible global carbon markets.7
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