Mark Carney, former Governor of the Bank of England and now UN Special Envoy for Climate Action and Finance, attends the opening of Finance Day at the UN Climate Summit COP26 in Glasgow on November 3, 2021.
DANIEL LEAL-OLIVAS | AFP | Getty Images
GLASGOW, Scotland – Flagship commitments at COP26 climate summit to reconnect the global financial system to net zero ‘resolutely ignore’ the elephant in the fossil fuel room, warned climate activists and activists .
A slew of financial announcements are expected Wednesday during the UN-brokered climate talks, called âfinance day,â as financial firms seek to align global assets with the historic Paris agreement for the first time.
The UK is chairing the major climate event in Glasgow, Scotland from October 31 to November 12. The summit is widely regarded as humanity’s last and best chance to prevent the worst impacts of global warming.
Private finance promises on the table, however, have been criticized for failing to prevent financial firms from investing in fossil fuels and enacting absolute emission reductions.
UK Finance Minister Rishi Sunak told assembled delegates on Wednesday that the delayed summit brought together institutions with assets worth more than $ 130 trillion. He said financial companies controlling 40% of global assets would align with the Paris Agreement’s 1.5 degree Celsius limit for global warming.
This represents a “historic wall of capital for the net zero transition in the world,” Sunak said. “Six years ago Paris set the ambition, today in Glasgow we are providing the investment we need to achieve this ambition.”
“Our job is to find the plumbing to make it work”
Among the commitments to be announced on Wednesday, former Bank of England Governor Mark Carney outlined the United Nations Glasgow Financial Alliance’s goals for Net Zero, or GFANZ.
Chaired by Carney, this global coalition of leading financial institutions seeks to accelerate the transition to a low carbon economy.
Oil rigs work on platforms in Gaoyu Lake in Gaoyou, east China’s Jiangsu Province, Friday, September 17, 2021.
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âFinance is becoming a window through which ambitious climate action can deliver a sustainable future that people around the world demand,â said Carney, welcoming the rapid increase in the amount of money managed with net zero goals. He said that amount had risen from $ 2 trillion a few years ago to $ 130 trillion today.
âWith GFANZ, we have all the money for the transition. Our job is to find the plumbing to make it work,â Carney said.
However, analysts at the NGO Reclaim Finance said the consolidation of financial companies affiliated with GFANZ “missed the point” on fossil fuels. Indeed, analysts said GFANZ had not ordered investments in fossil fuel expansion to stop – a red line drawn by the International Energy Agency if global warming is to stay below 1, 5 degree Celsius.
“A climate alliance without fossil fuel criteria in its guidelines is like an anti-smoking coalition that does not tackle cigarettes,” said Bill McKibben, author and co-founder of the popular climate campaign 350 .org, in a press release.
“As long as the financial sector ignores the IEA’s call to end its support for new oil, gas and coal projects, its claims to climate leadership should be mocked from the room.”
Earlier this week, GFANZ announced a number of new commitments, including “member withdrawal processes where necessary” and “accelerating the phase-out of fossil fuels in accordance with science”.
Patrick McCully, senior analyst at Reclaim Finance, said it was “encouraging” to see the group embrace the need for a sanctions process and an accelerated phase-out of fossil fuels. âNet zero alliances must now incorporate strong requirements on phasing out fossil fuels aligned to 1.5 Â° C in their criteria for financial institutions. Until that happens, the jury will still be on GFANZ and its effectiveness, “he added.
The burning of fossil fuels, such as coal, oil and gas, is the main driver of the climate crisis. Yet despite a wave of net zero emissions targets and increased commitments from many countries, some of the largest oil, gas and coal producers have failed to explain how they plan to dramatically reduce fossil fuel use. .
The 2015 Paris climate agreement states that financial flows “should be consistent with a path to low greenhouse gas emissions and climate resilient development”.
Focus on the quality of the pledges, “not just the quantity”
Ben Caldecott, director of the Oxford Sustainable Finance Group at the University of Oxford, said COP26 saw “unprecedented commitments” from financial institutions to align their portfolios, products and services with the Accord from Paris.
However, “part of this involves stopping funding for new fossil fuel infrastructure,” he continued. “You cannot deliver Paris without this happening as soon as possible, and no new green investment can compensate for this requirement.”
Caldecott said it would be imperative to focus on the quality of financial commitments made at COP26, “not just how much”.
Kenneth Haar, researcher at the Corporate Europe Observatory campaign group, said “self-regulation” among high carbon companies was at the heart of the private finance proposals on the COP26 table.
As a result, the proposals of the Net Zero Banking Alliance, the Taskforce for Climate-Related Financial Disclosures, the Investment Association and GFANZ were all likely to fail to deliver the necessary reforms.
âUnfortunately, the upcoming COP26 is set to become the biggest financial greenwash event in history,â said Haar.