The UK Parliament’s Environmental Audit Committee (EAC) announced today the launch of a new inquiry examining the role of the financial sector in the UK’s net zero transition, including the industry’s contributions to the green energy transition and the wind down of financing to the extraction of fossil fuels.
For the study, the EAC is seeking submissions from the industry in several key areas including corporate approaches to the financing of fossil fuel projects and pathways to reduce fossil fuel extraction, planned investment in areas including renewable energy generation, distribution and storage, the impact of Russia’s invasion of Ukraine on energy investment plans, and pathways to the responsible retirement of fossil fuel assets.
One of the key focus areas of the initiative will be to examine the role of the Glasgow Financial Alliance for Net Zero (GFANZ) in the transition. GFANZ was launched in April 2021, bringing together several climate-focused financial sector groups, including the Net Zero Asset Managers Initiative, the Net-Zero Asset Owner Alliance, the Net Zero Banking Alliance. In November, at the COP26 climate conference, GFANZ chair and UN Special Envoy for Climate Action and Finance Mark Carney announced that signatories to the GFANZ initiatives had reached $130 trillion, or roughly 40% of global financial assets.
In its statement announcing the launch of the inquiry, the EAC noted that despite the rapid growth in net zero commitments, “few nation states, nor financial institutions, are yet to make explicit commitments rapidly to phase out fossil fuels, or to be transparent regarding their exposure to fossil fuel investments.”
The EAC stated that it will be reaching out to UK-based GFANZ members to examine issues including their policies on fossil fuels and on investment in renewable energy technologies, and on their views of the geopolitical impact on the IEA’s position from its 2050 net zero roadmap last year that no new investment in fossil fuel initiatives is necessary to meet global energy needs.
Environmental Audit Committee Chairman, Rt Hon Philip Dunne MP, said:
“Mobilising financial institutions to support decarbonisation of the economy, for instance through the work of the Glasgow Financial Alliance for Net Zero, has been a key feature of the UK’s COP presidency. A year on from when Mark Carney launched the GFANZ initiative, our Committee is keen to explore how this work can be most effective at driving down global emissions. Collectively, the alliance represents nearly 40% of global private financial assets, and represents an enormous opportunity to influence meaningful action to cut emissions and support renewable energy generation.”