Global Financial Industry Urges Policy Action From World Leaders to Mobilize Trillions in Climate Investments
In the runup to the COP26 Climate Summit, the Glasgow Financial Alliance for Net Zero (GFANZ), a coalition of climate-focused financial industry alliances announced the publication of The Call to Action, a series of policy proposals aimed at G20 leaders geared towards helping the industry mobilize the massive amounts of capital needed to address climate change, help create a net zero economy, and achieve the goals of the Paris Agreement.
Launched in April 2021, GFANZ brings together several net zero groups, including the Net Zero Asset Managers Initiative, the Net-Zero Asset Owner Alliance, the Net Zero Banking Alliance, and the Net Zero Financial Service Providers Alliance. Chaired by UN Special Envoy for Climate Action and Finance Mark Carney, GFANZ represents nearly 300 firms across 40 countries, representing over $90 trillion in assets.
According to the coalition, massive amounts of capital will need to be allocated to the climate fight, including nearly $5 trillion in clean energy investments. In order to play their part in financing the green transition, though, the alliance notes the need for widespread government action and supportive policies to enable the mobilization of the required capital.
“Through GFANZ, the best of the global financial system has committed to net zero. The scale of these commitments – over $90 TN of balance sheets – is approaching the enormous financing need for the global transition. But financial firms can’t deliver sustainable economies alone – clear, credible, and ambitious climate policies are needed from G20 governments. The next few weeks in this decisive decade will help determine whether we avoid climate catastrophe. The core of the financial sector is stepping up – it’s time for major economies to do the same.”
The GFANZ Call to Action lays out a broad set of policies urged by the financial industry. Key proposals include setting economy-wide & 1.5°C-aligned net zero targets, aligning regulatory frameworks to net zero and encouraging coordination between regulators, introducing policies to price the externalities of carbon emissions, creating incentives to help people and businesses to go green, and mobilizing capital flows to emerging markets.
Some of the key recommendations include setting targets for TCFD-aligned disclosures and net zero transition plans, phasing out fossil fuel subsidies, working with farmers to stop deforestation, and developing a plan to retrain workers to support a just transition.
Nigel Topping, UN High Level Climate Action Champion, said:
“The world needs to halve emissions this decade in order to limit global warming to no more than 1.5 degrees C. Financial institutions have a critical role to play, including setting robust net zero targets and mobilising the trillions needed to finance a cleaner, more resilient zero carbon future. To help accelerate the transition, Governments must provide the appropriate policies and incentives and G20 countries have an opportunity to demonstrate leadership by accelerating action. I welcome this call from GFANZ as a signal of the seriousness with which the private sector is mobilising behind the transition to net zero.”
Click here to view the GFANZ Call to Action