More than 450 investors, banks, and insurers have signed up to one or more of the seven member alliances and initiatives of the<\/b> <\/b>Glasgow Financial Alliance for Net Zero<\/b> (GFANZ)<\/span><\/b><\/u><\/a>. Most attention, and criticism, has been focused <\/b>on the long-term commitment these institutions have signed up to \u2013 net-zero emissions from their clients by 2050. But perhaps more important is that the GFANZ alliances are committed to halving emissions by 2030. Yet, while the clock is tick<\/span>ing fast, with now less than eight years left to meet this target, very few of the alliances or their members have adopted the policies and frameworks to deliver it.<\/b><\/b><\/p>\n<\/div><\/div><\/div> Looking at the current guidelines of the alliances that make up the Glasgow Financial Alliance for Net Zero<\/u><\/a>, and the policies of their financial institution members, it seems like many may have forgotten to read the fine print before joining GFANZ. In signing up, they have endorsed the criteria of the UN\u2019s Race to Zero Campaign.<\/u><\/a> This commits all the members of GFANZ to cutting their emissions by 50% by 2030, in line with what the IPCC requires to keep warming under 1.5\u00b0C, and now less than eight years away (1).<\/p>\n Meeting this \u201c50×30\u201d target will require rapid and sustained action from the GFANZ alliances and their members. Every month of delay in bending the emissions curve sharply downwards increases the rate at which emissions would have to eventually be slashed to hit 50×30. It also increases the disruption that the transition will cause – while reducing the chances of hitting the target. We know where the bulk of emissions are coming from (the production and use of fossil fuels) and the IPCC has told us how much they need to be cut: it is time for financial institutions to start decarbonizing, and fast.<\/span><\/p>\n<\/div> Despite this urgency, out of the seven GFANZ alliances only the <\/span>Net-Zero Asset Owner Alliance<\/a><\/u><\/span> (AOA) requires its members to set targets for 2025 – or indeed for any year before 2030. Furthermore, for the alliances with commitments to set 2030 targets, there is little sense of the urgent need to establish these targets and to start acting on them (2). <\/span><\/p>\n Banks in the<\/span> Net-Zero Banking Alliance<\/u><\/a><\/span> (NZBA), for example, have 18 months from joining the alliance to set their <\/span>2030 t<\/span>argets for some of the industries on a list of nine high-carbon sectors. Then a further 18 months to set targets for a \u201csubstantial majority\u201d of the nine sectors. And then an extra year to disclose how they plan to ensure the targets are met (3). In effect, the 43 banks that launched the NZBA in April 2021 have until April 2024 just to decide on how much their highest polluting clients must cut their emissions by 2030, and until April 2025 to tell their shareholders and the rest of the world what actions they are going to take to ensure these cuts happen. <\/span><\/p>\n<\/div> It is also not enough for the GFANZ alliances to just require their members to set top-line targets in a timely manner. The alliances must ensure that what is being measured and what is being cut are real-world emissions.<\/span><\/p>\n Yet, even the AOA, the most ambitious of the alliances, is in danger of achieving emission reductions more on paper than in the atmosphere. The AOA\u2019s <\/span>guidelines<\/span><\/a> require its members to cut their financed emissions by at least 22% by 2025 and 49% by 2030, so basically in line with their 50×30 commitment (4). But, like all the other GFANZ alliances, the AOA members are allowed to set their targets based only on the statistical artifact of emission intensity rather than actual tons of carbon emitted. Intensity targets – such as emissions per barrel of oil produced or per dollar of revenue from oil sales – can allow for real world emissions to the atmosphere to increase under the guise of emission reductions. <\/span><\/p>\n In addition, while the AOA \u201cencourages\u201d its members to set targets based on their investees\u2019 Scope 3 emissions (i.e. emissions from the sale of a company\u2019s products), they say they will only require this once better data is available (with no clarity on who will decide when data is sufficient for which industries). This seriously undermines the impact of the AOA\u2019s targets on the emissions of fossil fuel companies, as around 90% of their total emissions is due to others burning and processing coal, oil and gas (5). <\/span><\/p>\n<\/div> At the risk of stating the obvious, GFANZ\u2019s members cannot achieve 50×30 if they continue to finance the expansion of the industries responsible for most emissions. Yet, none of the alliances have clear redlines against fossil fuel expansion. Only the AOA\u2019s new target-setting protocol recommends (but does not require) that its members act on the International Energy Agency\u2019s conclusions that there is no room for expanding oil and gas supply in a net-zero scenario.<\/span><\/p>\n Even on coal, the AOA, alone among the GFANZ alliances, has an explicit position<\/u><\/a> calling for an end to financing of all new coal infrastructure but it has not yet required its members to incorporate this demand into their policies. Reclaim Finance\u2019s Coal Policy Tool<\/u> <\/a>shows that out of 51 of the AOA\u2019s largest members, 37 have no policy on excluding investments in coal developers, and only six have a robust coal phase-out policy.<\/p>\n<\/div><\/div><\/div><\/div><\/div> With less than eight years left for the members of GFANZ to halve the climate pollution from the companies that they invest in, lend to and insure, 2022 is the year in which they must move from foot dragging and loophole-filled policies, to meaningful emissions-cutting – 50×30 – action. <\/b><\/p>\n<\/div><\/div><\/div><\/div><\/div>The clock is ticking\u2026<\/b><\/h1><\/span>
\u2026 and the financiers are waffling<\/b>
\n <\/b><\/h2><\/span>When emission reduction targets don\u2019t require emission cuts<\/b><\/h2><\/span>
When you want to put out a fire, don\u2019t throw more fuel on the flames <\/b><\/h2><\/span>