COP26: 450 financial institutions in 45 countries pledge $130tn to back climate action
World’s biggest banks to play a role in limiting greenhouse gas emissions; The Guardian, 2 November 2021
Pledge by over 450 financial institutions in 45 countries billed as one of the successes of Cop26 summit
Hundreds of the world’s biggest banks and pension funds with assets worth $130tn have committed themselves to a key goal in limiting greenhouse gas emissions, the UK government will announce on Wednesday.
The pledge by more than 450 financial institutions in 45 countries is intended to be one of the top achievements by the UK hosts of the Cop26 summit in Glasgow, and comes as some of the other aims of the summit – chiefly, setting the world on a path to limit global heating to 1.5C – are looking hard to reach.
Finance is key to the massive economic transformation required to move away from fossil fuels and reach net zero so the global economy can be run without damaging the climate.
But experts and campaigners cast doubt on the government’s finance claims, pointing out that the banks making the pledge are still free to pour cash into fossil fuels, and need only divert a small slice of their funding to low-carbon ends in the next decade.
...The finance pledge, known as the Glasgow Financial Alliance for Net Zero (GFANZ), will mean that by 2050 all of the assets under management by the institutions involved will be aligned with net zero emissions. Economists have estimated that about $100tn in investment is likely to be needed in the next three decades to meet the net zero goal, so in theory GFANZ will provide more than enough cash to meet the goal.
Mark Carney, former governor of the Bank of England, now a UK and UN climate envoy, said: “The architecture of the global financial system has been transformed to deliver net zero. We now have the essential plumbing in place to move climate change from the fringes to the forefront of finance so that every financial decision takes climate change into account … [This] rapid, and large-scale, increase in capital commitment to net zero, through GFANZ, makes the transition to a 1.5C world possible.”
But experts told the Guardian the claims were overblown. The $130tn figure refers to the assets the firms have under management, only a small proportion of which – about a third – will be devoted to low-carbon investments in the crucial next decade, when emissions must be halved to keep temperatures from rising by more than 1.5C above pre-industrial levels...