Addendum to a blog post originally posted on June 17th 2022:<\/strong><\/span><\/p>\n In September 2022, in response to legal concerns, the Race to Zero made some minor changes to the language in paragraph 5 of its Interpretation Guide on restricting the development, financing and facilitation of new fossil fuel assets. This original language is quoted in the article below. The new language reads \u201cEach Race to Zero member shall phase out its development, financing, and facilitation of new unabated fossil fuel assets, including coal, in line with appropriate global, science-based scenarios\u201d and so retains the requirement for Race to Zero members to end their support for fossil fuel expansion.<\/p>\n<\/div><\/div><\/div> The United Nation’s (UN) Race to Zero Campaign, an initiative of the UN climate convention, has updated and strengthened the criteria that must be followed by its more than ten thousand members. The new criteria explicitly mention for the first time the need for \u201cphasing down and out all unabated fossil fuels as part of a global just transition\u201d and require Race to Zero members to \u201crestrict the development, financing, and facilitation of new fossil assets\u201d. The UN \u201cclimate champions\u201d who lead the Race to Zero have urged all its members to comply with these criteria within one year or risk being removed from the race. Glasgow Financial Alliance for Net Zero (GFANZ) must now pick up the gauntlet and ensure that all its members align with the new Race to Zero targets and expectations. <\/b><\/span><\/p>\n<\/div><\/div><\/div> The Race to Zero\u2019s (1) newly strengthened and expanded criteria<\/a><\/u> are the product of a five-month long participative process involving more than 200 experts from the worlds of science, academia, business, finance, and civil society. The experts\u2019 recommendations were synthesized by the Race to Zero\u2019s Expert Panel Review Group<\/a><\/u> and received final approval from the leaders of the Race to the Zero, the UN\u2019s \u201cHigh-Level Climate Champions<\/a><\/u>\u201d, Nigel Topping and Dr Mahmoud Mohieldin.<\/p>\n<\/div> The Race to Zero criteria are divided into \u201cStarting Line\u201d criteria, which are the minimum requirements that all members must meet, and a set of optional high-ambition \u201cLeadership Practices.\u201d<\/p>\n The new Starting Line criteria reiterate that members must pledge to \u201creach (net) zero greenhouse gases as soon as possible, and by 2050 at the latest\u201d and must commit to a \u201cfair share\u201d of the 50% cut in global CO2 emissions that the Intergovernmental Panel on Climate Change (IPCC) says is needed by 2030 in order for global warming to stay under 1.5\u00b0C. <\/b>The \u201cInterpretation Guide\u201d that accompanies the new criteria provides analysis of this \u201cfair share\u201d requirement and implies that fairness at the global level will require businesses and financial institutions with most of their business in developed countries to do even more than halve their emissions in the next 7.5 years <\/b>(2).<\/p>\n The new criteria give much more detail on what will be needed to achieve these reductions including with regard to fossil fuels, which despite being overwhelmingly the main contributor to global warming were not mentioned in the previous criteria. The criteria are clear that reaching (net) zero will require Race to Zero members to \u201caccelerate the deployment of market-ready, existing technologies such as energy efficiency and renewable energ<\/b>y<\/strong>\u201d while \u201cphasing down and out all unabated fossil fuels as part of a global just transition.<\/b>\u201d Members also \u201cmust<\/b> restrict the development, financing, and facilitation of new fossil assets.<\/b>\u201d The criteria stress that \u201cthis includes no new coal projects<\/b>\u201d (3).<\/p>\n Despite failing to provide clarity on the use of offsets to meet decarbonization targets (4), the Race to Zero has provided welcome clarity in their additions to the Starting Line criteria. Together with phasing down fossil fuels and restricting new fossil assets, these important additions include:<\/p>\n These new Race to Zero criteria pose a major challenge to GFANZ, its seven sectoral net-zero alliances, and all of their more than 450 members. GFANZ is not structured to have its own demands for its members \u2014\u202finstead it requires its member alliances to join the Race to Zero and made clear in its 2021 Progress Report that \u201call GFANZ members must align with the Race to Zero criteria<\/b>\u201d (8). The Climate Champions state that<\/a><\/u> \u201call existing [Race to Zero] members and Partner organizations will need to meet the criteria by 15th June 2023 at the latest\u201d (9). GFANZ members should also note both that the Race to Zero\u2019s expert group is currently discussing an independent compliance mechanism to be launched in September, and that climate champions Nigel Topping and Dr Mahmoud Mohieldin say that members that fail to comply \u201crisk being removed from the Race\u201d (10).<\/p>\n The sectoral alliances (which are among the Race to Zero\u2019s \u201cPartner organizations\u201d) and their financial institution members have a year to close the now yawning gap between the level of ambition in their current guidelines (11) and what is now required by Race to Zero. The most important areas on which GFANZ members will need to upgrade their guidelines and policies are on financing fossil fuel expansion, accounting for their investee and client Scope 3 emissions, and setting targets based on absolute rather than intensity metrics<\/b> (12). They are also now required to publish transition plans to show how they will meet their commitments, including what actions they will take within the following 12 months, 2-3 years, and by 2030<\/b> (13).<\/p>\n<\/div> Overall, the Race to Zero\u2019s new criteria mark a significant step forward in efforts to clarify what must be done to turn net-zero commitments into meaningful real-world emission cuts that are aligned with 1.5\u00b0. It\u2019s now up to the whole GFANZ ecosystem, from its co-chairs Mark Carney and Micheal Bloomberg down through its member alliances to its individual financial institution members, to ramp up their ambition and put in place the policies and guidelines that will close the gap between the financial sector\u2019s claims of concern for the climate, and the reality of their actual business activities. <\/b><\/span><\/p>\n<\/div> Notes<\/u><\/span>:<\/span><\/b><\/p>\nNew and stronger expectations to slash emissions and phase down fossil fuels<\/h1><\/span>
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Why GFANZ members must align and comply with the Race to Zero criteria<\/h1><\/span>
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