A global financial commitment could mean 100,000 billion dollars for the climate. Now for the hard part
The coalition controls more than 40% of global banking assets and its organizers predict that it will be able to provide $ 100,000 billion in financing over the next three decades – more than $ 3 trillion a year – to accelerate the transition to net zero carbon emissions.
“We now have the essential plumbing in place to take climate change from the sidelines to the forefront of finance so that every financial decision takes climate change into account,” said Carney, the United Nations special envoy for the climate action and finance.
GFANZ signatories have pledged to meet science-based targets, including achieving net zero emissions by 2050 at the latest, achieving their 50% share of emissions reductions this decade, and revising targets every five years. All companies will report annually on their progress and their funded emissions.
But net zero commitments made by companies are often flawed, lack transparency, and do not include enforcement mechanisms to ensure they are met.
“We have to make sure that the commitments that have been made are followed up and held accountable. Ensuring the integrity of these commitments over time is fundamental to making a real difference and we must now firmly focus on the quality of the promises made by financial institutions, not just their quantity, ”said Ben Caldecott, director of the Oxford Sustainable Finance Group at the University of Oxford.
Guterres said he would establish an expert group that would come up with “clear standards for measuring and analyzing net zero commitments.”
Always finance oil and gas
As far as GFANZ is concerned, the financing of fossil fuels is a major point of contention.
The IEA has said that the development of new oil and gas fields must stop if the world is to limit warming to 1.5 degrees Celsius and avoid the worst effects of the climate crisis. But the commitments made by GFANZ members do not force them to stop funding fossil fuel projects, according to climate advocacy group Reclaim Finance.
In the six years since the Paris agreement, the world’s 60 largest banks have invested nearly $ 4 trillion in the fossil fuel industry, according to the group.
“More than 130 trillion dollars in [assets under management] and not a single rule to prevent even a dollar from being invested in expanding the fossil fuel sector. Once again, the financial sector is ready to inflate with commitments instead of making the concrete cuts in funding for oil, gas and coal that we really need, ”said Lucie Pinson, Executive Director of Reclaim Finance.
But they also recognized that companies can try to claim green credentials while continuing to contribute to climate change.
“There is no standard plan for achieving net zero, and the methods for achieving it will vary widely by industry. Nor are there universally accepted benchmarks to define progress, which increases the risk of “greenwashing”, “Carney and Bloomberg wrote.
“These are critical challenges that must be addressed as companies begin to turn their commitments into plans. Success will largely depend on industry coordination and public accountability,” they added.