Press Release

Paris, 28th October 2022 – The Glasgow Financial Alliance for Net Zero (GFANZ) ‘quiet quits’ the United Nation’s Race to Zero Campaign, following discussions about the risks of breaching antitrust law and resistance against some of its fossil fuel phase-out criteria. Even though this decision is disappointing, the GFANZ alliances remain partners of the Race to Zero and the objective to reach net zero by 2050 still requires financial institutions to adopt science-based transition plans with measures to support the phase-out of the coal, oil and gas industry, starting with a stop to all supports to fossil fuel expansion.

The GFANZ has released yesterday its second annual Progress Report (1). The GFANZ’s first Progress Report, issued last November, stated clearly that “all GFANZ members must align with the Race to Zero criteria”, but today’s report has no mention of any requirements for its members related to the United Nation’s (UN) campaign. The report simply lists Race to Zero along with the United Nations Framework Convention on Climate Change (UNFCCC), Intergovernmental Panel on Climate Change (IPCC), International Energy Agencey (IEA), the UN High-Level Expert Group on Net Zero and others, as bodies that GFANZ “will continue to engage regularly with.”

While not mentioning directly any change in the status of GFANZ’s relationship with the Race to Zero, the report is notable for carrying a legal disclaimer and repeatedly stressing that all its guidance is voluntary and that each of its seven sectoral alliances “are independent initiatives subject only to their individual governance structures.” Any mention of the change to the Race to Zero’s status is notably absent from GFANZ press release (2) on its new Progress Report.

The Progress Report does however state that the sectoral alliances (including the Net Zero Asset-Owner Alliance (NZAOA), Net Zero Asset Managers Initiative (NZIA), Net Zero Banking Alliance (NZBA), and Net Zero Insurance Alliance (NZIA)) are themselves partners of the Race to Zero, which requires them to commit to a “fair share” of the 50% cut in global CO2 emissions that the IPCC says is needed by 2030 for global warming to stay under 1.5°C (3) and to end their support for fossil fuel expansion.

Paddy McCully, Senior Analyst at Reclaim Finance says : It is disappointing that GFANZ is quiet quitting the Race to Zero. Clearly they are giving in to their Wall Street members who have been reported as threatening to quit the alliance if they are expected to actually pull back on their finance for fossil fuels. But as the individual alliances within GFANZ are still Race to Zero partners, these alliances and their bank, investor and insurer members are still supposed to follow the Race to Zero criteria. And in reality, regardless if any “net-zero” or “1.5-aligned” alliance or financial institution commits to following the Race to Zero criteria, the credibility of its climate policies will continue to be judged against these criteria, and in particular on their continued financing for companies expanding the supply of fossil fuels. Banks and investors cannot wish away the terrifying math of the global 1.5°C carbon budget which has zero room for any new coal mines or oil and gas fields.”