GBANZ, to be launched will ensure commitments across all parts of the financial sector are ‘coordinated and ambitious’, according to update
Many of the world's biggest banks, asset managers, insurers, and asset owners have joined forces to form the Glasgow Financial Alliance for Net Zero (GFANZ), an initiative that aims to work as an umbrella organisation for the various net zero coalitions launched by the financial sector.
The initiative, which debuts on the eve of the US administration's Earth Day summit of world leaders, will bring together the network of established and emerging investor coalitions geared at scaling the financial sector's climate ambitions, including the recently launched Net Zero Asset Owners Alliance and the Net Zero Asset Managers initiative.
UK Chancellor Rishi Sunak, UN special envoy on climate action and finance Mark Carney, US Climate Envoy John Kerry, billionaire philanthropist and media mogul Michael Bloomberg, COP26 climate action champion Nigel Topping, and US Treasury Secretary Janet Yellen are expected to join the launch of the GFANZ later today.
The coalition, which is to be chaired by Carney, will bring together 160 firms collectively responsible for $70tr of assets under management, including more than 40 banks that are the founding members of a new UN-backed Net Zero Banking Alliance (NZBA).
"GFANZ will broaden, deepen and raise ambition in the financial sector, allowing firms to demonstrate their collective commitments to supporting companies and countries to achieve the goals of the Paris agreement," a briefing document on the new venture. "GFANZ will also catalyse strategic and technical coordination on steps firms need to take to align with a net zero future."
The group said it planned to ensure that climate commitments being established by players across financial system were "coordinated and ambitious", noting the industry currently lacked a sector-wide strategic forum that united its various different players.
GFANZ expects to complement and broaden the Race to Zero campaign's ongoing effort to mobilise the global business community in support of robust climate targets, with a particular focus expected to be on the those parts of the financial sector, such as insurance underwriters and financial market infrastructure, that do not yet have net zero coalitions in place as part of the UN-backed climate campaign. "This undermines our collective goal of ensuring coherency and consistency across the financial sector," it said.
All members of GFANZ must have a net zero emissions target in place that meets the benchmark requirements of the UN Race to Zero campaign and as such is accredited by the initiative. Consequently, they are required to have science-based climate goals in place that cover all emissions scopes, establish interim targets for 2030, and commit to transparent reporting and accounting on their progress.
GFANZ said one of its first actions would be to "bring global banks into the fold", noting that the newly-launched NZBA demands that all its members set an interim climate targets for 2030 or sooner that focus on the most emissions intensive parts of their portfolios. Many of the world's largest funders of fossil fuels have joined the initiative, including Bank of America Merrill Lynch, Barclays, Citi, HSBC, Morgan Stanley, and NatWest.
The GFANZ steering group intends to meet several times ahead of the initiative's first summit, which will take place at the COP26 Climate Summit this autumn, it added.
"GFANZ will endure beyond COP26," the group stated. "The journey to net zero will last for decades and will only increase in importance and priority. Supported by the Race to Zero architecture, GFANZ will continue to be the place the financial sector meets to progress and accelerate the transition to a net zero economy, which is necessary to have a net zero financial sector."
The launch of GFANZ and NZBA comes as banks face growing pressure to match recently adopted 2050 net zero financed emissions targets with efforts to stop financing fossil fuel companies in the short term, with today's call to action coming just weeks after a major report revealed how the 60 biggest banks ploughed $750bn into oil, gas and coal companies in 2020 alone, marking a $40bn increase from 2016 levels.
There have also been growing calls for the investment sector to set clearer standards and rules around what constitutes a net zero portfolio amid growing fears of 'greenwashing' among investors and environmental campaigners, an issue that was laid bare last month when Carney courted controversy after claiming Brookfield Asset Management, the Canadian investment giant where he is a board member, was a 'net zero' company across its investment portfolio, despite it boasting billions of dollars of holdings in fossil fuel-related projects.