Two new net zero alliances for the financial sector were launched on April 21, 2021: The Glasgow Financial Alliance for Net Zero (GFANZ) and the Net-Zero Banking Alliance (NZBA). The launch of these two alliances will bring about coordinated commitments across the financial system that are subject to transparent reporting and accounting in line with the Race to Zero criteria.
We highlight key aspects of GFANZ and NZBA in this Blog Post.
GFANZ brings together over 160 leading financial firms responsible for assets exceeding USD 70 trillion from existing and new net zero initiatives across the financial industry, with a shared goal to broaden, deepen and accelerate the transition of the global economy to net zero emissions by 2050.
All initiatives in GFANZ require signatories to set science-based interim and long-term goals to reach net zero emissions by the target of 2050 or earlier. In addition, GFANZ members are required to supplement these goals with short-term targets and action plans, including 2030 interim target setting.
GFANZ is chaired by Mark Carney, the UK Prime Minister’s Finance Advisor for COP26 and UN Special Envoy on Climate Action and Finance.
GFANZ has four objectives before the COP26 summit:
- Broaden the Race to Zero’s existing finance sector campaign by establishing credible net zero commitments for all key finance groups, and by working together with the Race to Zero’s independent expert groups.
- Expand the pool of financial institutions committing to the net zero transition plan through an active engagement program.
- Raise ambition across the financial system by providing a forum for strategic and technical coordination and to facilitate conversations among financial sector leaders.
- Showcase the collective efforts and achievements of the financial sector in leading the transition plan.
The industry-led, UN-convened NZBA is the latest net zero alliance and is one of the founding members of GFANZ. NZBA is convened by the UN Environment Programme Finance Initiative (UNEPFI), and was co-launched by the Financial Services Taskforce (FSTF) of the Prince of Wales’ Sustainable Markets Initiative.
An initial group of 43 of the world’s biggest banks from 23 countries have joined NZBA with a focus on delivering the banking sector’s ambition to align the sector’s climate commitments with the Paris Agreement goals.
The NZBA joins the existing initiatives of other financial sub-sectors: the Net Zero Asset Managers Initiative and the Net-Zero Asset Owner Alliance.
The NZBA members are committed to:
- Align their lending and investment portfolios with the pathway to net zero emissions by 2050.
- Set 2030 targets and a 2050 target, with intermediate targets to be set every 5 years from 2030 onwards.
- Focus initial 2030 targets on the carbon-intensive sectors where the bank can have the most significant impact.
- Set sector-level targets for all or most of the carbon-intensive sectors, for example, coal, oil & gas, transport etc.
- Engage with their clients’ own transition and decarbonization, and promote the transition to net zero economy.
- Report, on an annual basis, the emissions in line with best practice, and the progress against the transition strategy and climate-related sectoral policies.
- Take a robust approach to the role of carbon offsets.
Upcoming Net-Zero Insurance Alliance
Soon, the financial sub-sector net zero alliances will be joined by the UN-convened Net-Zero Insurance Alliance (NZIA) which will comprise some of the world’s leading insurers and re-insurers. The NZIA is expected to be launched at the UN Climate Change Conference in November 2021.
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