Through the Glasgow Financial Alliance for Net Zero (GFANZ), over $130 trillion of private capital is committed to transforming the economy for net zero. These commitments, from over 450 firms across 45 countries, can deliver the estimated $100 trillion of finance needed for net zero over the next three decades.
These are the opening lines of the GFANZ press release issued during yesterday’s ‘finance day’ at COP26. But is the $130tn climate pledge believable?
The mobilisation of funds to accelerate the transition to a net zero world is vital and the eye watering numbers sound good but as the FT points out, this is not an investment fund ready to back new projects, these are assets managed by the GFANZ member institutions. Which means there are scenarios where banks count single assets more than once.
“Make no mistake: the money is now there if the world truly wants to arrest the climate crisis. Through the Glasgow Financial Alliance for Net Zero #GFANZ, over $130 trillion of capital from 450+ firms across 45 countries is committed to transforming the economy,” tweeted Mark Carney, UN Special Envoy for Climate Action and Finance and COP26 Private Finance Advisor to PM Johnson.
But NGOs warned the announcement represents no silver money bullet, saying financial institutions should stop investing in fossil fuels if they are truly serious about supporting a net zero future.
The GFANZ members will align around 40% of the world’s financial assets to support the Paris Goal of limiting global warming to 1.5C above pre-industrial levels, and have committed to ‘delivering their fair share of the 50% emission reductions this decade’.
The question is will these promises deliver? Outside Greta says blah, blah, blah to it all, echoing the inner thoughts of many of us when we listen to politicians and bankers make, and break, promises for the umpteenth time. COP26 is all about these big promises but it is now or never to turn the blah, blah, blah into action. The public needs more than an annual report on the horizon to buy into the idea that these statements mean something tangible. Perhaps innovation can play a part in building trust. Algorithms, real-time data and other technologies could be used to keep the public properly informed and onboard. Think America’s billboard-sized national debt clock in New York, which shows the passing public the country’s increasing debt levels. Something similar, that the world can trust in, in our pockets and on display, to show how quickly, how much, and where the money is going to fight the climate crisis, could help build trust in net zero pledges.
Big COP26 announcements so far:
- US-EU led pledge to slash methane emissions by 30% by the end of this decade
- India pledges to become net zero by 2070 (beyond the 2050 target)
- $1.7tn to support indigenous people protect forests and land
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