A coalition of the world’s largest investors, banks and insurers who collectively control $ 130 trillion in assets said on Wednesday they were commit to using this capital achieve net zero emissions targets in their investments by 2050, in an effort that would make limiting climate change a central goal of most major financial decisions for decades to come.
The group, called the United Nations Glasgow Financial Alliance for Net Zero, is made up of 450 banks, insurers and asset managers in 45 countries. He said the commitment amounted to a transformation of the global financial system and would help businesses, financial companies and entire sectors undergo fundamental restructuring for a carbon neutral future.
“We now have the essential plumbing in place to move climate change from the fringes to the forefront of finance so that every financial decision takes climate change into account,” Mark Carney, former head of the Bank of England , who heads the alliance, said in a statement.
The agreements are largely voluntary. But they show the commitment of a wide range of financial institutions – banks, insurers, pension funds, asset managers, exchanges, rating agencies and audit firms – to reducing emissions from the companies they invest in. and get their loans aligned with the goal of limiting global temperature rise to 1.5 degrees Celsius above pre-industrial levels.
Companies have agreed to undergo a review every five years to measure how well they are meeting these goals. They also said they would report the shows they fund each year.
But critics have said pledges are insufficient because they fail to encourage investors to stop putting money into fossil fuels.
“This announcement once again ignores the biggest elephant in the room: the fossil fuel companies,” said Richard Brooks, director of climate finance for STAND.earth, an environmental group. declaration. “We cannot stay below 1.5 degrees if financial institutions don’t stop funding coal, oil and gas companies.”
“It seems like a very impressive number,” said Sonia Hierzig, head of financial sector research at ShareAction, a charity. “But not all of this will go into the green investment space just yet.”
The $ 130 trillion is already invested in assets. To meet the net zero targets, finance companies will either need to reduce emissions from the companies and projects in which they already invest, or divest and use the capital for new green investments.
“It is always positive that at least there is recognition that we have to raise a large amount of money,” Hierzig said. But the association has “a lot of question marks or concerns about some of the underlying initiatives,” for example, she added, the decision to allow asset owners to invest in power plants in the coal already under construction.
The coalition was formed in April and includes among its members the investment management firm BlackRock, HSBC Holdings, Morgan Stanley and Deutsche Bank.
Importantly, the initiative would create a new body to set standards for climate-related goals and investor and business disclosures.
The alliance also said that nearly 40 central banks in countries generating two-thirds of global emissions would introduce stress tests to assess how financial firms manage climate-related risks. Some, including the European Central Bank and the Bank of England, plan to administer stress tests on the banks they oversee early next year.
The alliance is also committed to increasing private capital flows to emerging and developing economies, which are among those facing the most brutal costs of climate change.