Glasgow Financial Alliance for net zero
The good, the bad and the ugly
The Glasgow Financial Alliance for Net Zero (GFANZ) was launched in April 2021 by UN climate envoy Mark Carney in collaboration with the UN Race to Zero Campaign. Currently co-chaired by Mark Carney and Michael Bloomberg, it is “committed to accelerating and mainstreaming the decarbonization of the world economy and reaching net zero emissions by 2050.” It has seven sectoral alliances with varying levels of ambition as expressed in particular through their guidelines for their members. None of the alliances require their members to set robust 1.5°C-aligned targets for reducing the absolute emissions from their clients and investees. Here is a brief summary of the good, the bad, and the ugly of each alliance.
GFANZ’s seven sectoral alliances represent asset owners and managers, banks, and insurers, as well as financial consultants and providers of data and other financial services. These alliances have more than 550 members from 50 countries including many of the world’s most powerful financial institutions. GFANZ has no detailed requirements for its members and each of the sectoral alliances have (or in some cases are supposed to be developing) their own sets of guidelines. So that it wouldn’t have to develop its own credible science-based guidelines for each sector, GFANZ originally insisted that all of its members align with the criteria of the Race to Zero (see box) .
The alliances remain members of the Race to Zero campaign in their own right, despite GFANZ recent decision to loosen its own ties with the campaign.
Caving in to climate denial
In October 2022 GFANZ dropped its requirement that all its members must join the Race to Zero and instead announced that its members would merely be “encouraged” to partner with the Race to Zero.
GFANZ changed its position because the Race to Zero strengthened its criteria in June 2022 (with a further modification in September to address concerns about falling foul of competition law) to clarify that keeping warming below 1.5°C means “phasing down and out all unabated fossil fuels as part of a global, just transition.” The new criteria also state that each Race to Zero member “shall phase out its development, financing, and facilitation of new unabated fossil assets.”
This distancing from the Race to Zero came in response to pressure from US banks which are themselves facing threats, including of legal actions, from climate denialist politicians and public figures in the US. These attacks on the US banks come despite the fact that the banks continue to pour hundreds of billions of dollars into the fossil fuel industry and show no sign of intending to take meaningful measures to reverse this.
The banks could have stood up for science and stood by their own commitments. Instead they have chosen to push back on the NZBA and GFANZ and insist that they detach themselves from the Race to Zero.
GFANZ alliances
There is a wide range of ambition between the different alliances. The Net Zero Asset-Owner Alliance is widely seen as the most serious in terms of its commitment to pushing its members to align their investments with 1.5°C. But even the AOA has still to require its members to set targets based on absolute emissions and to adopt policies ending their support for fossil fuel expansion. Three of the alliances have still not even released guidelines for how their members should set targets, more than a year after being launched.
We explain below a few of the key strengths and weaknesses of the alliances.
GFANZ needs to pressure the alliances to get serious
Regardless of GFANZ’s relationship with the Race to Zero, it still has a responsibility to push its member alliances to adopt credible science-based 1.5°C-aligned guidelines.
GFANZ and its leadership have made positive steps in this direction. In August 2022 co-chairs Mark Carney and Michael Bloomberg, along with its vice-chair Mary Schapiro, put out a statement in stating “there is no rationale for financing new coal projects” and citing Race to Zero language on ending the development, financing and facilitation” of new fossil assets. And on November 1, the alliance published guidance on financial transition plans which notes many of the elements that robust 1.5°-aligned plans must contain, including policies to restrict finance to fossil fuel developers.
GFANZ and Carney, Bloomberg and Schapiro need to double down on using their bully pulpit to highlight that the carbon budget cannot be fooled with carbon accounting tricks, and that GFANZ members’ net-zero commitments will only be considered credible if they align with the science on 1.5°C.