{"id":24148,"date":"2022-11-03T12:38:28","date_gmt":"2022-11-03T11:38:28","guid":{"rendered":"https:\/\/reclaimfinance.org\/site\/?p=24148"},"modified":"2023-02-08T11:28:53","modified_gmt":"2023-02-08T10:28:53","slug":"gfanz-issues-transition-plan-recommendations-and-a-call-to-action","status":"publish","type":"post","link":"https:\/\/reclaimfinance.org\/site\/en\/2022\/11\/03\/gfanz-issues-transition-plan-recommendations-and-a-call-to-action\/","title":{"rendered":"GFANZ issues transition plan recommendations and a Call to Action"},"content":{"rendered":"<p><div class=\"fusion-fullwidth fullwidth-box fusion-builder-row-1 fusion-flex-container nonhundred-percent-fullwidth non-hundred-percent-height-scrolling\" style=\"--awb-border-radius-top-left:0px;--awb-border-radius-top-right:0px;--awb-border-radius-bottom-right:0px;--awb-border-radius-bottom-left:0px;--awb-flex-wrap:wrap;\" ><div class=\"fusion-builder-row fusion-row fusion-flex-align-items-flex-start fusion-flex-content-wrap\" style=\"max-width:1216.8px;margin-left: calc(-4% \/ 2 );margin-right: calc(-4% \/ 2 );\"><div class=\"fusion-layout-column fusion_builder_column fusion-builder-column-0 fusion_builder_column_1_1 1_1 fusion-flex-column\" style=\"--awb-bg-size:cover;--awb-width-large:100%;--awb-margin-top-large:0px;--awb-spacing-right-large:1.92%;--awb-margin-bottom-large:20px;--awb-spacing-left-large:1.92%;--awb-width-medium:100%;--awb-order-medium:0;--awb-spacing-right-medium:1.92%;--awb-spacing-left-medium:1.92%;--awb-width-small:100%;--awb-order-small:0;--awb-spacing-right-small:1.92%;--awb-spacing-left-small:1.92%;\"><div class=\"fusion-column-wrapper fusion-column-has-shadow fusion-flex-justify-content-flex-start fusion-content-layout-column\"><div class=\"fusion-text fusion-text-1\" style=\"--awb-content-alignment:justify;--awb-text-color:var(--awb-color4);\"><p><b>The Glasgow Financial Alliance for Net Zero (GFANZ) released<\/b><span style=\"text-decoration: underline;\"><a style=\"color: #8ac56b;\" href=\"https:\/\/www.gfanzero.com\/press\/gfanz-launches-critical-resources-for-financial-institutions-to-convert-their-net-zero-ambition-into-action\/\" target=\"_blank\" rel=\"noopener\"> <b>several new papers<\/b><\/a><\/span><b> on November 1. We provide here brief comments on a report on<\/b><span style=\"text-decoration: underline;\"><a style=\"color: #8ac56b;\" href=\"https:\/\/assets.bbhub.io\/company\/sites\/63\/2022\/09\/Recommendations-and-Guidance-on-Financial-Institution-Net-zero-Transition-Plans-November-2022.pdf\" target=\"_blank\" rel=\"noopener\"> <b>Financial Institution Net-Zero Transition Plans<\/b><\/a><\/span><b>, and on a<\/b><span style=\"text-decoration: underline;\"><a style=\"color: #8ac56b;\" href=\"https:\/\/assets.bbhub.io\/company\/sites\/63\/2022\/10\/GFANZ-Call-to-Action-One-Year-On.pdf\" target=\"_blank\" rel=\"noopener\"> <b>Call to Action<\/b><\/a><\/span><b> aimed at G20 governments. The transition plan report contains many helpful recommendations which GFANZ and its leadership should urge the sectoral alliances to incorporate into their guidelines. The Call to Action, however, fails to send a clear message on the need for governments to stop support for fossil fuel expansion including through ending subsidies, and wrongly emphasizes the role of carbon markets and carbon pricing in the transition.<\/b><\/p>\n<\/div><\/div><\/div><div class=\"fusion-layout-column fusion_builder_column fusion-builder-column-1 fusion_builder_column_1_1 1_1 fusion-flex-column\" style=\"--awb-bg-size:cover;--awb-width-large:100%;--awb-margin-top-large:0px;--awb-spacing-right-large:1.92%;--awb-margin-bottom-large:20px;--awb-spacing-left-large:1.92%;--awb-width-medium:100%;--awb-order-medium:0;--awb-spacing-right-medium:1.92%;--awb-spacing-left-medium:1.92%;--awb-width-small:100%;--awb-order-small:0;--awb-spacing-right-small:1.92%;--awb-spacing-left-small:1.92%;\"><div class=\"fusion-column-wrapper fusion-column-has-shadow fusion-flex-justify-content-flex-start fusion-content-layout-column\"><div class=\"fusion-text fusion-text-2\" style=\"--awb-content-alignment:justify;\"><p>In light of GFANZ\u2019s recent decision to<span style=\"text-decoration: underline;\"><a href=\"https:\/\/reclaimfinance.org\/site\/en\/2022\/10\/28\/gfanz-quiet-quits-the-uns-race-to-zero-campaign\/\" target=\"_blank\" rel=\"noopener\"> downgrade its ties<\/a><\/span> with the UN Race To Zero Campaign, it is positive to see co-chairs Michael Bloomberg and Mark Carney, and vice-chair Mary Schapiro, stressing the need to halve CO2 emissions by 2030 in the foreword to their detailed report giving guidance on financial institution net-zero transition plans. This<span style=\"text-decoration: underline;\"><a href=\"https:\/\/reclaimfinance.org\/site\/en\/2022\/02\/02\/time-for-financial-institutions-to-show-urgency-on-halving-emissions-by-2030\/\" target=\"_blank\" rel=\"noopener\"> 50% by 2030 cut<\/a><\/span> is a key part of the Race to Zero\u2019s criteria, and is what the IPCC says is necessary to limit warming to 1.5\u00b0C. (1) The need to halve emissions is also mentioned in the body of the report. It is also positive to see GFANZ stress the need for financial institutions to take immediate and meaningful action. The report says:<\/p>\n<p><em>\u00ab\u00a0GFANZ urges financial institutions to be aggressive when developing their net-zero strategies, as the next few years are crucial for the state of climate change. Without deep emissions reduction by 2030 across all sectors, the IPCC warns that it will be impossible to limit global warming to 1.5 degrees C.\u201d (p.12)<\/em><\/p>\n<\/div><div class=\"fusion-title title fusion-title-1 fusion-title-text fusion-title-size-one\" style=\"--awb-text-color:#59bc6d;--awb-margin-bottom:15px;--awb-font-size:16px;\"><div class=\"title-sep-container title-sep-container-left fusion-no-large-visibility fusion-no-medium-visibility fusion-no-small-visibility\"><div class=\"title-sep sep- sep-solid\" style=\"border-color:#3e3e3e;\"><\/div><\/div><span class=\"awb-title-spacer fusion-no-large-visibility fusion-no-medium-visibility fusion-no-small-visibility\"><\/span><h1 class=\"fusion-title-heading title-heading-left fusion-responsive-typography-calculated\" style=\"margin:0;font-size:1em;--fontSize:16;--minFontSize:16;line-height:1.4;\">Don\u2019t develop stranded assets<\/h1><span class=\"awb-title-spacer\"><\/span><div class=\"title-sep-container title-sep-container-right\"><div class=\"title-sep sep- sep-solid\" style=\"border-color:#3e3e3e;\"><\/div><\/div><\/div><div class=\"fusion-text fusion-text-3\" style=\"--awb-content-alignment:justify;\"><p>The report mentions \u201cpriority sector\u201d policies that exclude financing for companies expanding coal, oil and gas (p.54). It also states that fossil fuel finance should be consistent with 1.5\u00b0 pathways and should not support<em> \u201cthe development of assets that will be stranded\u201d<\/em> (p.12). It states that:<\/p>\n<p><em>\u201cBodies such as the IEA and IPCC agree that the rapid shift away from fossil fuels is critical to achieving net zero, with widely used pathways projecting a significant decline in the use of coal, oil, and gas through 2050.\u201d (p.52)<\/em><\/p>\n<p>A key weakness of many current GFANZ member targets is that they are based only on emissions intensity, so it is encouraging that GFANZ says here that:<\/p>\n<p><em>\u00ab\u00a0Ultimately getting absolute emissions to zero is the end goal, and both absolute and intensity metrics should be considered together to measure progress of different pathways to net zero.\u00a0\u00bb (p.79)<\/em><\/p>\n<p>The guidelines of GFANZ\u2019s sectoral alliances are generally weak on the issue of requiring clients\/investees Scope 3 emissions be included in their targets. It is good to see clarity here that net-zero commitments should cover clients\/investees Scope 3 emissions <em>\u201cin sectors that are significant climate change contributors or where Scope 3 emissions are material and can be incorporated based on data availability.\u201d (p.18)<\/em><\/p>\n<\/div><div class=\"fusion-title title fusion-title-2 fusion-title-text fusion-title-size-one\" style=\"--awb-text-color:#59bc6d;--awb-margin-bottom:15px;--awb-font-size:16px;\"><div class=\"title-sep-container title-sep-container-left fusion-no-large-visibility fusion-no-medium-visibility fusion-no-small-visibility\"><div class=\"title-sep sep- sep-solid\" style=\"border-color:#3e3e3e;\"><\/div><\/div><span class=\"awb-title-spacer fusion-no-large-visibility fusion-no-medium-visibility fusion-no-small-visibility\"><\/span><h1 class=\"fusion-title-heading title-heading-left fusion-responsive-typography-calculated\" style=\"margin:0;font-size:1em;--fontSize:16;--minFontSize:16;line-height:1.4;\">Engagement with teeth<\/h1><span class=\"awb-title-spacer\"><\/span><div class=\"title-sep-container title-sep-container-right\"><div class=\"title-sep sep- sep-solid\" style=\"border-color:#3e3e3e;\"><\/div><\/div><\/div><div class=\"fusion-text fusion-text-4\" style=\"--awb-content-alignment:justify;\"><p>The report sends mixed messages on the issue of divesting from high-emission companies. The Executive Summary mentions divestment only as something to avoid in the case of companies that need capital to transition (p.xii). The text of the report, however, rightly notes that successful engagement with clients and investees requires \u201can escalation process with consistent and transparent criteria\u201d:<\/p>\n<p><em>\u201cWhen clients or portfolio companies show little or no response to the engagement, a financial institution should consider using the business levers available to it according to its business relationship. These levers will differ and include stewardship actions such as proxy voting, shareholder resolutions, and voting to remove directors who have failed in their accountability; financing levers such as more onerous\/costly lending conditions and refusal to engage in new business; and, as a last resort, cessation of the relationship either as a service or product provider, or opting to divest. (p.62)<\/em><\/p>\n<p>GFANZ needs to insist that its member alliances incorporate the recommendations in this report into their guidelines and it must name and shame those that refuse to do so.<\/p>\n<\/div><div class=\"fusion-title title fusion-title-3 fusion-title-text fusion-title-size-one\" style=\"--awb-text-color:#59bc6d;--awb-margin-bottom:15px;--awb-font-size:16px;\"><div class=\"title-sep-container title-sep-container-left fusion-no-large-visibility fusion-no-medium-visibility fusion-no-small-visibility\"><div class=\"title-sep sep- sep-solid\" style=\"border-color:#3e3e3e;\"><\/div><\/div><span class=\"awb-title-spacer fusion-no-large-visibility fusion-no-medium-visibility fusion-no-small-visibility\"><\/span><h1 class=\"fusion-title-heading title-heading-left fusion-responsive-typography-calculated\" style=\"margin:0;font-size:1em;--fontSize:16;--minFontSize:16;line-height:1.4;\">Call to (In)action on fossils<\/h1><span class=\"awb-title-spacer\"><\/span><div class=\"title-sep-container title-sep-container-right\"><div class=\"title-sep sep- sep-solid\" style=\"border-color:#3e3e3e;\"><\/div><\/div><\/div><div class=\"fusion-text fusion-text-5\" style=\"--awb-content-alignment:justify;\"><p>In contrast to the clear language on fossil fuels in the transition plan document, GFANZ\u2019s Call to Action to the G20 governments is mealy mouthed about the central role played by the fossil fuel industry in causing the climate crisis.<\/p>\n<p>The Call to Action rightly calls on the G20 governments to raise their climate ambition; to develop transition plans that phase-out high polluting sectors while supporting fossil fuel-dependent communities; and to ensure finance, including via the multilateral development banks, for the transition in the Global South.<\/p>\n<p>But it fails to repeat the clarity of the August \u201c<span style=\"text-decoration: underline;\"><a href=\"https:\/\/reclaimfinance.org\/site\/en\/2022\/08\/31\/gfanz-leaders-give-personal-view-against-coal-financing-they-should-make-it-official\/\" target=\"_blank\" rel=\"noopener\">No New Coal<\/a><\/span>\u201d statement from Carney, and it makes no mention of the International Energy Agency&rsquo;s finding that there is no room for new fossil fuel supply projects in a 1.5\u00b0C carbon budget. The Call to Action also fails to emphasize the need for governments to remove their subsidies and other forms of support for fossil fuels.<\/p>\n<p>Moreover, the Call to Action focuses on promoting carbon markets and carbon pricing, measures which<span style=\"text-decoration: underline;\"><a href=\"https:\/\/www.researchgate.net\/publication\/272786779_Ten_reasons_why_carbon_markets_will_not_bring_about_radical_emissions_reduction\" target=\"_blank\" rel=\"noopener\"> decades of experience<\/a><\/span> have shown to be at best ineffective and a distraction from meaningful action, and often harmful both for climate mitigation and the rights of local communities and ecosystems.<\/p>\n<\/div><div class=\"fusion-text fusion-text-6\" style=\"--awb-content-alignment:justify;--awb-text-color:var(--awb-color4);\"><p><strong>In the context of the recent controversy over GFANZ\u2019s relationship with the Race to Zero, it is encouraging to see GFANZ produce some thoughtful recommendations on financial institution transition plans. The key now will be whether GFANZ and especially Carney, Bloomberg and Schapiro will highlight these recommendations and push for their implementation, or whether the transition plans report will get lost in the ocean of documentation that the alliance is producing. Indeed the weak language relating to fossil fuels in the G20 Call to Action and its focus on carbon markets and pricing raises concerns about what the priorities for GFANZ\u2019s public messaging might be.<\/strong><\/p>\n<p style=\"text-align: justify;\"><strong><span style=\"color: var(--body_typography-color); font-family: var(--body_typography-font-family); font-size: var(--body_typography-font-size); font-style: var(--body_typography-font-style,normal); letter-spacing: var(--body_typography-letter-spacing);\">\u00a0<\/span><\/strong><\/p>\n<\/div><\/div><\/div><\/div><\/div><div class=\"fusion-fullwidth fullwidth-box fusion-builder-row-2 fusion-flex-container nonhundred-percent-fullwidth non-hundred-percent-height-scrolling\" style=\"--awb-border-radius-top-left:0px;--awb-border-radius-top-right:0px;--awb-border-radius-bottom-right:0px;--awb-border-radius-bottom-left:0px;--awb-flex-wrap:wrap;\" ><div class=\"fusion-builder-row fusion-row fusion-flex-align-items-flex-start fusion-flex-content-wrap\" style=\"max-width:1216.8px;margin-left: calc(-4% \/ 2 );margin-right: calc(-4% \/ 2 );\"><div class=\"fusion-layout-column fusion_builder_column fusion-builder-column-2 fusion_builder_column_1_1 1_1 fusion-flex-column\" style=\"--awb-padding-top:10px;--awb-padding-right:10px;--awb-padding-bottom:0px;--awb-padding-left:10px;--awb-overflow:hidden;--awb-bg-size:cover;--awb-border-color:#fffffff;--awb-border-top:1px;--awb-border-right:1px;--awb-border-bottom:1px;--awb-border-left:1px;--awb-border-style:solid;--awb-border-radius:10px 10px 10px 10px;--awb-width-large:100%;--awb-margin-top-large:0px;--awb-spacing-right-large:1.92%;--awb-margin-bottom-large:20px;--awb-spacing-left-large:1.92%;--awb-width-medium:100%;--awb-order-medium:0;--awb-spacing-right-medium:1.92%;--awb-spacing-left-medium:1.92%;--awb-width-small:100%;--awb-order-small:0;--awb-spacing-right-small:1.92%;--awb-spacing-left-small:1.92%;\"><div class=\"fusion-column-wrapper fusion-column-has-shadow fusion-flex-justify-content-flex-start fusion-content-layout-column\"><div class=\"fusion-text fusion-text-7\" style=\"--awb-content-alignment:justify;\"><p><b><span style=\"color: #ffffff;\"><u>Notes<\/u><\/span><span style=\"color: #ffffff;\"> :<\/span><\/b><\/p>\n<ol>\n<li>The 50% cut in CO2 emissions by 2030 was originally described in the IPCC\u2019s 2018 special report on 1.5\u00b0C. The 2022 Sixth Assessment Report Working Group III describes a 50% reduction in CO2 2019-2030 (and 45% reduction in Kyoto-GHGs) as a \u201ckey characteristic\u201d of \u201cmitigation pathways with immediate action towards limiting warming to 1.5\u00b0C\u201d (<span style=\"text-decoration: underline;\"><a href=\"https:\/\/report.ipcc.ch\/ar6wg3\/pdf\/IPCC_AR6_WGIII_FinalDraft_TechnicalSummary.pdf\" target=\"_blank\" rel=\"noopener\">IPCC AR6 WGIII, Technical Summary, Table TS.2, p.TS-31<\/a><\/span>).<\/li>\n<\/ol>\n<\/div><\/div><\/div><\/div><\/div><\/p>\n","protected":false},"excerpt":{"rendered":"","protected":false},"author":26,"featured_media":24160,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[222],"tags":[],"acteurs_financiers":[2452],"thematique":[],"webinar_type":[],"programme":[],"class_list":["post-24148","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog_en","acteurs_financiers-gfanz-en"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v23.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>GFANZ issues transition plan recommendations and a Call to Action - Reclaim Finance<\/title>\n<meta name=\"description\" content=\"The GFANZ released several new papers on November 1. 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