Officials from the UK and US have announced a new initiative to boost efforts by the financial system to move the global economy to net zero greenhouse gas emissions.
The alliance of major financial firms, spearheaded by the former governor of the Bank of England Mark Carney and US climate envoy John Kerry, will seek to build a unified framework for companies to commit to in a bid to keep green initiatives effective and rooted in science.
While a number of large banks, insurers and asset managers have started to commit to action, differing frameworks have stood in the way of unified and meaningful change needed to address the climate crisis.
However the Glasgow Financial Alliance for Net Zero (GFANZ) - launched ahead of the Cop26 summit in the city - will bring existing net zero initiatives together under one umbrella to help ensure all sub-sector efforts are consistent and ambitious.
So far, more than 160 firms with assets of at least $70 trillion (£50 trillion) have signed up, of which 43 are banks - as part of the Net-Zero Banking Alliance (NZBA) - including Barclays, Morgan Stanley and HSBC and Citi.
All members will need to have their climate plans in line with the UN’s Race to Zero campaign, which ensures they are science-based, cover all types of emissions, have 2030 interim targets and commit to transparent reporting and accounting.
For the banks joining GFANZ, all will need to set an interim target of 2030 or sooner within 18 months that focuses on those parts of its financing business responsible for the largest share of greenhouse gas emissions.
“This is the breakthrough in mainstreaming climate finance the world needs,” Mr Carney, who is the UK’s financial advisor for the summit and the UN’s climate and finance envoy, said in a statement.
“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.”
Launching the plan on the eve of Joe Biden’s Head of State Climate Summit alongside Mr Carney and Treasury Secretary Janet Yellen, Mr Kerry said the world’s biggest financial firms recognised energy transition was a “vast” commercial opportunity.
“Ultimately, their commitment of capital and assets, as well as adherence to high standards and reporting, will accelerate the transition to this new economy, create a massive number of new jobs, and increase our collective ability to tackle the climate crisis.”
The support from the US official follows a series of meetings with different chief executives from the financial sector over the last few months.
In a statement Boris Johnson said: “Uniting the world’s banks and financial institutions behind the global transition to net zero is crucial to unlocking the finance we need to get there – from backing pioneering firms and new technologies to building resilient economies around the world.
“The Glasgow Financial Alliance for Net Zero will lead this charge ahead of COP26 to scale-up our ambition, accelerate our shift and help us to build back greener together.”
COP26 President-Designate Alok Sharma added: “Without adequate finance, we simply will not achieve the change needed to safeguard our planet for future generations.
“As the world continues down a crucial decade of delivery on climate action, GFANZ will ensure much-needed acceleration towards net zero by uniting some of the world’s most powerful financial actors. I look forward to seeing this new alliance drive up ambition as we look to COP26 and beyond.”
Additional reporting by Reuters