In the year since COP26, the Glasgow Financial Alliance on Net Zero (GFANZ) has gained new members, built up its secretariat, set up regional hubs, and published a slew of reports. Its sectoral alliances\u2019 members have announced scores of new targets. But it is too early to say if GFANZ is having an impact on what ultimately counts, the emissions paths of its members, and in particular if they will cease financing new fossil fuels and massively increase clean energy funding. Its recent divorce from the Race to Zero sends an alarming signal that GFANZ\u2019s members will feel no pressure to take meaningful action. GFANZ leadership, and in particular Mark Carney and Michael Bloomberg, need to speak out forcefully on the actions needed to shift funding from fossils to clean, and be prepared to name and shame the laggards in their alliance.<\/b><\/p>\n<\/div><\/div><\/div> GFANZ co-chair Mark Carney announced on \u201cFinance Day\u201d at COP26 that the alliance had reached 450 members with $130 million in assets and was now at a scale sufficient to \u201cdeliver the transition<\/a><\/span>.\u201d One year on, GFANZ has grown by another 100 members and increased its total managed and owned assets to more than US$150 trillion \u2014 around 40% of the world\u2019s private financial assets. (1)<\/p>\n GFANZ\u2019s growing secretariat and its various working groups have been active over the past year. They have formed regional networks in Africa and the Asia Pacific; announced together with President Macron a Net Zero Data Public Utility<\/a><\/span>; and produced a slew of papers on issues including net zero transition plans, how to pay for decommissioning fossil fuel infrastructure, mobilizing capital for emerging markets and developing economies, and the necessary ratio of clean to dirty financing.<\/p>\n Many of these initiatives are promising. Progress has been to say the least uneven over the past year among the seven sectoral alliances.<\/p>\n The Net Zero Banking Alliance (NZBA) has received a lot of attention in recent months, although sadly not for the ambition of the targets set by its members. Instead, media interest<\/a><\/span> has focused on the reported threats by JPMorgan, Morgan Stanley and Bank of America to quit the NZBA over fears that they would be expected to comply with the criteria of the UN\u2019s Race to Zero Campaign.<\/p>\n<\/div> The Net Zero Data Public Utility could help meet the huge need for better net zero-related data, including so that civil society groups can better monitor corporate and financial sector claims. And the paper on financial institution net zero transition plans<\/a><\/span> contains useful recommendations including on phasing out fossil fuel expansion and meaningful corporate engagement processes.<\/p>\n Unfortunately these positive initiatives are counteracted by GFANZ\u2019s insistence on pushing voluntary carbon markets, including in a recent Call to Action<\/a><\/span> for G20. This a dangerous distraction from the real work of cutting emissions. It is magical thinking to believe that the numerous inherent problems<\/a><\/span> with the concept and practice of carbon offsetting can be solved while simultaneously massively scaling up the market.<\/p>\n Since GFANZ launched in April 2021, it had insisted that all its members must align with the criteria of the Race to Zero campaign. But in October 2022, under pressure from the US banks, it declared that its members would merely be \u201cencouraged\u201d to partner with the Race to Zero. All of the sectoral alliances, however \u2014 including the NZBA \u2014 remain partners of the Race to Zero and so in theory committed to following its criteria, including ceasing finance to new fossil fuel supply projects. But with GFANZ now having downgraded its link to the Race to Zero, the sectoral alliances could now pull out of the campaign and still remain part of GFANZ.<\/p>\n<\/div> The only mechanism GFANZ now has for pushing its members to take seriously their net zero commitments is moral suasion. This means that Carney, Bloomberg and the rest of the GFANZ leadership need to double down on their efforts to persuade their members to act, including through naming and shaming the worst laggards, even if these include the giants of global finance such as JPMorgan, BlackRock and Amundi.<\/b><\/p>\n \u00a0<\/span><\/p>\n<\/div><\/div><\/div><\/div><\/div>A busy but uneven start<\/h1><\/span>
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Offsets: A dangerous distraction from addressing fossil fuels<\/h1><\/span>