The financial system must support the net zero transition
This article was originally published by Climate & Capital Media and is reprinted with permission.
Mark Carney set solid markers for net zero in two appearances during Climate Week.
In remarks that opened NYC Climate Week, speaking as the United Nations Special Envoy for Climate Action and Finance, Carney cut to the chase: “Virtually all companies in all industries need to transform their business model, which requires investments of more than $ 100,000 billion over the next three decades. The effort to achieve net zero requires action across the economy, he said.
Carney delivered this big picture in a direct tone that stood out even amid the urgent but abstract rhetoric of other opening remarks by several notable climate champions. The future is near, Carney said. “We need a net zero economy by 2050 and rapid decarbonization from today.”
“In a few weeks in Glasgow, the world has the opportunity to start getting a 1.5 [degrees Celsius] world, ”he said, referring to the next summit of COP26, where the signatories of the Paris Agreement meet in the United Kingdom. “If we go over 1.5 C, the results will be catastrophic.
Virtually all companies in all industries need to transform their business model, which will require investments of more than $ 100,000 billion over the next three decades.
Carney called for a holistic approach to the entire global financial sector: “To achieve our goals of net zero and create rapid systemic change, we need to ensure that the entire financial system supports the transition. It means mainstreaming engagement, alignment and net zero commitment across the financial sector. “
Carney boasted the newly formed Glasgow Financial Alliance for Net Zero (GFANZ) as an example vehicle to help turn the ambitious blue sky agenda into reality on the ground. This financial sector alliance joins the United Nations Race to Zero coalition of “real economy” actors committed to achieving net zero carbon emissions by 2050. Existing members include 733 cities, 31 regions, 3,067 companies , 173 of the world’s largest investors and 622 higher education institutions. . Collectively, these entities cover nearly 25% of global CO2 emissions and over 50% of GDP. GFANZ, of which Carney is president, brought 250 financial institutions representing nearly $ 90 trillion in assets under management, throwing considerable financial weight behind the move towards net zero.
“The money for ambitious climate action is there,” Carney said. “Ambitious climate action is not only possible, it will pay off if countries act.”
The next day, Carney spoke to investors in his hat of vice president and head of interim investment at Brookfield Asset Management, which manages $ 625 billion in assets and recently raised $ 7 billion on a planned impact investment fund of $ 12.5 billion. He reiterated his conviction that net zero, and not “piecemeal” green investments, is the best strategy to achieve the goals of the Paris Agreement. Its advantages: the wide range of net-zero goals and detailed plans to achieve them. (Join Race to Zero campaign, members must use science-based guidelines, cover all scope emissions, include setting 2030 targets, and commit to transparent reporting and accounting according to defined criteria.) Carney noted that over 73% of global assets are covered by net zero plans, up from just 30% at the start of 2020; and that these commitments are increasingly supported by government policy. He also has Noted that “60% of global emissions can be reduced with commercially viable technologies today. “
The money for ambitious climate action is there.
Concluding his two presentations, Carney announced a new alliance, the Net Zero Financial Services Providers Alliance, be added to the Race to Zero campaign. The 17 inaugural members include Bloomberg, Moody’s and Standard & Poor’s, the Big Four accounting firms, S&P Global and London’s Stock Exchange Group. Members commit to align “all relevant products and services” with achieving net zero greenhouse gas emissions by 2050, and to set “significant milestones for 2025” within 12 months of their achievement. membership.
Here is the gist of Carney’s net zero push: he waits all public companies to adopt net-zero plans in the near future. “I would say with a fairly high degree of confidence that over the next three years a net zero commitment and a plan to achieve it will be the norm for state-owned enterprises.”
It’s a new standard that we could get used to.