Financial institutions that have joined the Glasgow Financial Alliance for Net Zero (Gfanz), an industry alliance to tackle climate change, could be delisted for failing to meet targets by a new independent commission from early 2023.
The independent body will have the power to expel members for non-compliance with new criteria, including coal funding, reports FT.
Enhanced UN checks on financial groups' compliance with new criteria for ending coal funding and phasing out fossil fuels from portfolios could be announced at Climate Week in New York in September and launched at the COP27 climate talks in Egypt in November.
More than 450 financial firms with assets of $130 trillion have joined the Glasgow Financial Alliance for Net Zero (Gfanz). The initiative to create the group was announced at the COP26 summit in 2021. It is led by former Bank of England governor and Brookfield Asset Management chief Mark Carney, former New York mayor Michael Bloomberg and former Securities and Exchange Commission chairman Mary Shapiro.
Gfanz's goal is to encourage the world's most powerful financial companies to commit to a net zero global economy by 2050. Members must meet standards set by the UN-led Race to Zero campaign.
In June, Race to Zero updated its rules to make them more onerous. It introduced stricter criteria, including a ban on supporting new coal projects. Existing corporate members will have to meet these criteria from June 2023.
The alliance is currently in the process of establishing an independent accountability body where civil society groups, including NGOs, will be able to report to financial institutions that they are not meeting the Race to Zero criteria.
"Financial institutions that have signed up to affiliate groups under the Gfanz umbrella, spanning industries such as banking, asset management, insurance and advisory, now face the ignominious prospect of being delisted if they do not comply with the Race to Zero criteria," it is said in the material.
The new rules require all signatories to phase out and phase out all fossil fuels that are not offset by carbon sequestration by 2050 at the latest. As well as ending funding for new coal projects and achieving interim goals of zero net emissions by 2030. The deadline for compliance is June 2023 for existing members, and new members will have to comply immediately.
"We absolutely welcome Race to Zero's new compliance mechanism to identify and remove members who do not meet its criteria," Shapiro said. activities of the financial sector, and will also help to clarify which financing is truly contributing to the transition to net zero, rather than disguising business as usual financing or greenwashing efforts.''
Earlier, EcoPolitic wrote, that the REN21 study found that the world uses more fossil fuels, than ever, and the transition to renewables has essentially stalled.
As EcoPolitic previously reported, analysts believe that at the COP27 UN climate summit, governments will be under increased pressure to detailing the plans for the green transition taking into account all the challenges.
