that there is no room in a 1.5\u00b0C-aligned world for new investments in fossil fuel supply. For the first time within GFANZ, this updated Protocol recommends that its members act on the conclusion and stop financing fossil expansion. But regrettably the recommendations apply to methodologies that will likely have only a tangential impact on the AOA members\u2019 financing activities.<\/span><\/p>\nAOA members can choose to set targets for high-emitting sectors in addition to or instead of sub-portfolio targets (4). The new Protocol says that targets for the oil and gas, and utility sectors should \u201c<\/span>withdraw financing from new coal-related assets and new oil and gas fields and . . . refrain from investing in, or providing finance to, assets that support the expansion of coal, oil, or gas production and to scale down production<\/span><\/b>\u201d (5). While it is positive to see this language in the Protocol, the AOA does not require its members to set sectoral targets, and few have chosen to do so. Out of the first 29 AOA members to have published their 2025 targets, only four have set sectoral targets (6). <\/span><\/p>\nThe updated Protocol establishes a new methodology for setting targets for direct investments in infrastructure as one of the \u201csub-portfolio\u201d asset classes (7). Infrastructure targets should \u201c<\/span>support the phase-out of fossil fuels required by 1.5\u00b0C scenarios<\/span><\/b>.\u201d The methodology calls on members to exclude financing new coal projects and new \u201cupstream greenfield\u201d oil projects \u201cbeyond those already committed by the end of 2021\u201d (8). <\/span>Unfortunately, these recommendations<\/span><\/b> are unlikely to impact the great majority of new fossil fuel projects as these are financed by the companies that develop them, not directly by outside investors<\/span><\/b>.<\/span><\/p>\n<\/div>The AOA was the first of the net zero alliances, and the most ambitious in terms of its targets and <\/span>recommendations. It is the only alliance to have yet produced a detailed guide to target setting. It is therefore disappointing that the AOA has missed the opportunity of using this updated Protocol to set requirements for its members that are robust enough to likely achieve its ambitious targets.<\/span> With now less than eight years left to halve global emissions there is no more time for putting off tough choices<\/span> on meaningful actions that will finally reverse the expansion of the fossil fuel industry.<\/span><\/span> <\/b><\/p>\n<\/div><\/div><\/div><\/div><\/div>Notes<\/span>:<\/span><\/b><\/p>\n\n- Of the seven alliances and initiatives that are under the umbrella of the Glasgow Financial Alliance for Net Zero, the AOA is the only one that requires targets before 2030, and the only one for which members have already set targets.<\/span><\/li>\n
- Membership of <\/span>the GFANZ member alliances requires committing to the criteria of the UN\u2019s <\/span><\/span>Race to Zero Campaign<\/span><\/span>.<\/span><\/span><\/u><\/a> This in turn requires a commitment to meeting the global goal of a 50% cut in emissions by 2030. <\/span>The AOA, however, is the only alliance <\/span>that is currently calling for its members to set<\/span> 2030 targets<\/span> which would clearly align with this 50×30 goal.<\/span><\/span><\/li>\n
- \u201cTarget Setting Protocol: Second Edition,\u201d AOA, January 2022, p.<\/span>36<\/span>.<\/span> This \u201cq<\/span>ualified removals<\/span>\u201d <\/span>term<\/span> adds <\/span>both <\/span>a loophole and more confusion. <\/span>The term does not appear in<\/span> \u201c<\/span>The <\/span>Net in Net Zero<\/span>\u201d nor elsewhere in the Protocol. It may refer to <\/span>the numerous forms of removals mentioned in \u201cThe Net in Net Zero\u201d including <\/span>by forests, soils, <\/span>wetlands<\/span> and <\/span>mechanical methods such as <\/span>Direct Air Capture. <\/span>In this case<\/span>, experience with the history of land-use offsetting suggests <\/span>this could be a large loophole <\/span>which would reduce pressure on polluters to cut their emissions <\/span>by <\/span>enabl<\/span>ing<\/span> them to buy<\/span> large amounts of <\/span>cheap <\/span>offsets that will represent <\/span>often bogus <\/span>and at best often only short-term <\/span>removals.<\/span> L<\/span>and-use offsets can also threaten <\/span>the land rights and even survival of local <\/span>and Indigenous <\/span>communities.<\/span><\/span><\/li>\n
- The updated protocol adds methodologies for seven n<\/span>ew sectors including cement; agriculture, <\/span>forest<\/span> and fisheries; and chemicals<\/span>.<\/span><\/span><\/li>\n
- \u201cTarget Setting Protocol: Second Edition,\u201d p.60.<\/span><\/li>\n
- \u201cCredible Ambition: Immediate Action: The first <\/span><\/span>progress report of the UN-Convened Asset Owner Alliance,\u201d October 2021.<\/span><\/li>\n
- The asset classes for which the AOA set methodologies in the first version of the Protocol are listed equity, corporate <\/span>equity<\/span> and real estate. The updated Protocol elaborates on its previous real estate methodology. The infrastructure assets included in the new methodology includes fossil fuel-related infrastructure such as power plants, pipelines, and coal trains.<\/span> <\/span><\/li>\n
- The new Protocol<\/span>\u2019s position on financing gas expansion is weaker than for <\/span>coal or oil. It states that: \u201cFor gas, members shall not invest in assets which are not aligned with science-based <\/span>or government-<\/span>issued regional\/national 1.5\u00b0C<\/span> pathways<\/span>. Further guidance will be given in a forthcoming position paper on <\/span>oil & gas\u201d <\/span>(<\/span>p.53). The reference to \u201cgovernment<\/span>-issued\u201d national pathways is problematic as many <\/span>