The realities of climate change can no longer be ignored, and the financial world has a bigger role than many people think. Not only are the walls closing in – in boardrooms, in courts and in parliaments – but it’s also increasingly a matter of cold, hard numbers. These days, a phrase you hear churned out by the biggest asset managers is that climate-related risk is an investment risk.
Unlocking the trillions of climate investment required to meet corporate, national and global environmental targets will require deep and systemic changes in the financial sector. Industry groups are looked upon to show the direction of change by encouraging the adoption of standards, regulations and frameworks which conform to their interests. As early-stage players in the climate policy game, the industry body landscape is a fast moving one.
Many new bodies have emerged over the past couple of years, with The Glasgow Financial Alliance for Net Zero (GFANZ) standing out as the most promising industry body. GFANZ is likely to create the most positive impact, due to its scale, global spread and backing by influential actors. Targets have been set, promises have been made, agreements have been signed. Holding these companies and countries accountable and helping them reach these targets and promises is the next step; and the GFANZ is the body necessary to engender this transition.
GFANZ was only set up in 2021 but is becoming a particularly influential industry body. The GFANZ is chaired by Mark Carney, who served as the Governor of the Bank of England until 2020. GFANZ brings together the increasingly numerous new and existing net zero finance initiatives, forming one sector-wide forum. So far over 160 firms have joined, together responsible for assets in excess of $130 trillion, with the collective aim of accelerating the transition to net zero emissions by 2050 at the latest. Carney himself was Boris Johnson’s Finance Advisor for COP26, as well as the UN Special Envoy for Climate Action and Finance. His chairmanship resulted in the GFANZ gaining much attention during and as a result of COP26.
Financial institutions can join GFANZ by joining one of the following sector-specific alliances:
Members of each Alliance are accredited by the UN Race to Zero campaign, and they need to set science-based, long-term goals to reach net zero by 2050, or sooner. These will be supplemented with short-term, member-determined targets and action plans.
more than a word.