Net Zero finance groups brought together in umbrella body chaired by Mark Carney

Net Zero finance initiatives covering more than 160 investors and banks with more than  $70trn in assets have been brought together under the umbrella initiative Glasgow Financial Alliance for Net-Zero (GFANZ).

Launched by Mark Carney, the UN Special Envoy on Climate Action and Finance and former Governor of the Bank of England, GFANZ includes the existing Net-Zero Asset Managers Initiative and Net-Zero Asset Owner Alliance, as well as a new UN-convened Net-Zero Banking Alliance.

Created in partnership with the UNFCCC Climate Action Champions, the UN Race to Zero campaign and the COP26 Presidency, GFANZ – which will be chaired by Carney – aims to accelerate the transition of the global economy to net-zero emissions by 2050 at the latest.

Signatories are required to set science-aligned long-term goals, supplemented by interim targets and action plans. Firms must also advocate for public policy that supports the transition.

The new Net Zero Banking Alliance (NZBA) officially launched today as part of the announcement, with 43 banks – including Bank of America, Barclays, UBS and Morgan Stanley – managing $28.5trn of assets combined. Alongside committing to reaching Net Zero by 2050 or earlier, signatories must set interim targets, engage their clients on the transition, annually report progress and take a “robust approach to the role of offsets in transition plans”.

The announcement comes just days after the Institutional Investors Group on Climate Change led a campaign with 35 investors including Amundi, DWS, KBI, Legal & General, Northern Trust, M&G and Nordea, calling on major banks to adopt Net Zero targets ahead of the creation of “a bespoke Paris alignment assessment benchmark” to assess progress. 

Today’s announcement received lukewarm responses from campaign groups, however. David Barmes, an economist at NGO Positive Money, said “it’s difficult to take these net zero pledges seriously when the world’s 60 biggest private sector banks have financed fossil fuels to the tune of £2.7tn since the adoption of the Paris Agreement”.

Becky Jarvis, Senior Strategist for the Bank on our Future network, said: “What seems at first glance to be quite ambitious, actually lacks the urgency and ambition that the climate crisis demands. This is not the climate leadership that the world needs from Carney, it is a cover for banks to hide behind, and could serve to undermine some best practice in the sector.”

Head of US sustainable finance network Ceres, Mindy Lubber, who yesterday announced that 14 new investors had joined the Net Zero Asset Managers Initiative, acknowledged that “some will say that commitments are just words,” but added: “I believe these commitments have teeth behind them and we’re seeing it every day.”

State Street Global Advisors is among the new recruits to the asset managers initiative – following hot on the heels of the other Big Three investment houses, BlackRock and Vanguard, which joined last month. Membership now stands at 87 investors with $37tn under management.

“We’re working with each of these players to translate these promises into deeds,” Lubber said, explaining that they would be expected to accompany their ambitions with a “robust climate action plan” to achieve Net Zero. 

Today also saw the announcement that seven of the world’s largest insurers and reinsurers – AXA, Allianz, Aviva, Munich Re, SCOR, Swiss Re and Zurich Insurance – are working with the UNEP FI to establish the Net-Zero Insurance Alliance (NZIA). The alliance is expected to be launched at COP26 in November and will also form part of GFANZ. 

“These seven global insurers and reinsurers represent the ‘G7’ of the insurance industry in terms of net-zero ambition,” said Butch Bacani, who leads the PSI at the UN Environment Programme. 

To ensure that the NZIA and its members comply with applicable laws, rules and regulations, they are working with external legal advisors to help determine the shape and substance of the NZIA’s activity and Net Zero commitment. This legal analysis is expected to be finalised by June 2021, in time for the G7 Leaders’ Summit in the UK.