Banks and asset managers representing 40% of the world’s financial assets have now pledged to meet the goals set out in the Paris climate agreement, as an alliance championed by former central banker Mark Carney swells under the gaze of a world increasingly alarmed by planetary warming.
More than 450 firms representing $130 trillion of assets now belong to the Glasgow Financial Alliance for Net Zero, almost double the roughly $70 trillion when GFANZ was launched in April, according to a progress report published by the coalition on Wednesday. Signatories must commit to use science-based guidelines to reach net zero carbon emissions by mid-century, and to provide 2030 interim goals.
GFANZ was created in April. Convened by the United Nations, the alliance comprises six groups spanning all corners of the financial industry. On Wednesday, the group announced that Michael R. Bloomberg, the owner and founder of Bloomberg News parent Bloomberg LP, will co-chair GFANZ together with Carney.
In a joint op-ed on Wednesday, the two underscored the need for private-sector contributions if the world is to successfully fight climate change.
“Ramping up adoption of clean energy and other sustainable infrastructure fast enough to avoid the worst impacts of climate change will require trillions of dollars in new investment — likely in the ballpark of $100 trillion,” the GFANZ co-chairs wrote. “Most of that will have to come from the private sector, especially after the enormous toll that the pandemic has taken on governmental budgets.”
For Carney, the announcement marks a milestone moment after he managed to get some of the world’s biggest financial firms to sign up at the eleventh hour. UK Chancellor Rishi Sunak called the commitments “historic” in a separate statement. He also used the opportunity to announce plans to make Britain, which is hosting the COP26 climate summit, “the world’s first net zero aligned financial center.”
Despite the huge headline number, skeptics question the underlying terms of the commitments. According to French nonprofit Reclaim Finance, none of the sub-alliances that make up GFANZ require signatories to stop financing fossil-fuel expansion. And since the 2015 Paris accord was struck, global banks have funneled $4 trillion into oil, gas and coal, with almost half a trillion of that allocated this year alone, according to Bloomberg data.
United Nations Secretary-General Antonio Guterres said in a recent speech that mankind’s “addiction to fossil fuels is pushing humanity to the brink.” He also said that “there is a deficit of credibility and a surplus of confusion over emissions reductions and net zero targets, with different meanings and different metrics.”