COP26 Finance Day has spotlighted firms’ net-zero commitments with efforts to increase transparency and standardisation. Here are the headlines:
Mandatory net-zero pathway disclosures for UK investment firms
UK-based asset managers will be required to disclose their net-zero transition plans from 2023 under planned legislation by the UK government, chancellor Rishi Sunak announced Wednesday at the COP26 Finance Day.
There has not been widespread movement yet from private markets managers to make net-zero commitments, although pressure from investors is mounting.
Asset managers and publicly-listed companies will be required to “publish transition plans that consider the government’s net-zero commitment or provide an explanation if they have not done so.” These transition plans will need to provide details about high-level targets set by firms to mitigate climate risk, such as net zero by 2050 commitments and interim targets and actionable steps on the way to achieving these targets. Net-zero commitments will not be mandatory for these firms under this legislation. It will also not prohibit carbon-intensive investments, such as investments in fossil fuels.
The UK government is aiming for transparency and comparability around firms’ net-zero targets and plans. “It will be for the market to determine if these plans are adequate or credible. Investors, through their stewardship, may use their influence and their votes to encourage more ambition or accelerated progress,” the government said in a factsheet on the legislation plans.
GFANZ: $130 trillion of capital is committed to net zero by 2050
Financial institutions representing assets worth $130 trillion have committed to net zero by 2050 targets under the banner of the Glasgow Financial Alliance for Net Zero. GFANZ, co-chaired by UN special envoy for climate action Mark Carney and former New York City mayor Michael Bloomberg, brings together 450 asset managers, asset owners, banks, investment consultants and other financial institutions.
Members must commit to net-zero carbon emissions by 2050 across Scope 1 and 2, and “to the extent possible, material Scope 3” across their portfolios. Members must also set interim 2030 targets for a proportion of their portfolios, “consistent with a fair share” of reducing global carbon emissions by 50 percent by 2030 to help limit global warming to 1.5 degrees Celsius.
Many members had previously made other net-zero commitments or joined net-zero initiatives and alliances. GFANZ, launched in April, is an effort to standardise these commitments.
Private and public capital moves for a net-zero world
- Rockefeller, IKEA and Bezos foundations and eight DFIs have committed $10 billion collectively to a clean energy technology fund, the Global Energy Alliance for People and Planet. They’re aiming to draw a further $90 billion in private and public capital.
- Swedish national pension fund AP2 has committed €50 million to BlackRock’s Climate Finance Partnership. Other investors include France’s DFI AFD, Germany’s DFI KfW, the Hewlett Foundation, Quadrivium Foundation, the Grantham Environmental Trust and the Japanese government.
- CDC, Finnfund and Norfund have formed a $500 million partnership to protect forests in sub-Saharan Africa.
- The US, EU, UK, Germany and France collectively commit $8.5 billion to the South Africa Just Energy Transition Partnership, supporting South Africa to develop renewable energy and move away from coal.
- Japan has committed $10 billion to overseas climate finance over the next five years, prime minister Fumio Kishida announced in a speech at COP26.
- The UK has announced a $3 billion support package for clean green infrastructure.
- The US will provide $11 billion per year by 2024 for developing countries’ transition to net zero in its International Climate Finance Plan – pending Congressional approval, president Biden announced in a speech.
- The US will provide $500 million per year for clean technology funds, US treasury secretary Janet Yellen announced in a speech.
- The UK has committed £100 million ($137 million; €118 million) to the Taskforce on Access To Climate Finance, which facilitates access to climate finance for developing countries, COP26 president Alok Sharma announced in a speech.