- Hundreds of the biggest banks and pension funds across the globe have come together to mitigate the GHG emissions with financial assets worth US $130 trillion.
- London city is set to become the first net zero finance centre across the globe as per Sunak.
- Around 450 firms based in 45 countries, which are a part of the global finance industry, have delivered pledges to limit emissions.
Amid the ongoing COP26 UN Climate Change Conference being hosted by the UK , hundreds of the biggest banks and pension funds across the globe have come together to mitigate the greenhouse gas emissions with financial assets worth US $130 trillion, as announced by the UK Government on Wednesday. Around 450 firms based in 45 countries, which are a part of the global finance industry, have delivered pledges to limit greenhouse gas emissions and take steps to fight climate change. This has been among the top achievements of the UK in the COP26 among other steps to keep the world on the path of sustainability and to limit global heating to 1.5C.
Source: Copyright © 2021 Kalkine Media
Finance plays a major role in the transformation of the economy, reducing its dependence on fossil fuels and moving towards greener and cleaner sources of energy. But there has been scepticism among experts and campaigners regarding the finance claims of the Government, as banks are still channelising funds towards fossil fuels. Some of the high-street banks, like Barclays, have greenwashing the customers under the garb of ESG rules, claiming to be aligning with eco-friendly and sustainable projects, while investing in polluting coal mining, oil and gas businesses.
RELATED READ: 5 stocks you can buy amid UK green finance overhaul
London city is set to become the first Net Zero finance centre across the globe, as stated by Chancellor Rishi Sunak on Tuesday. To keep the UK moving on its path of transition towards a Net Zero economy, publishing the Net Zero transition plans have been made a mandatory requirement for all UK financial institutions and listed companies. This will obligate them to create a detailed decarbonisation plans which will make the transition process more systematic.
How global banks can help in controlling greenhouse gas emissions?
The number of financial firms which are aligned with the UK’s net zero plans has tripled under the present leadership, covering financial assets worth US $130 trillion, as per Sunak. This huge pool of funds controlled by these financial firms can be utilised to mitigate the catastrophic impact of climate change.
The UK had launched the finance pledge GFANZ, or the Glasgow Financial Alliance for Net Zero, with the aim of capitalising on the power and resources of the financial sector and put them to a good use, which is the transition to Net Zero. By 2050, all the assets under these finance institutions will be aligned with net zero goals. According to economists, meeting the net zero target requires an investment of around US $100 trillion over the period of next three decades. Thus, speculatively more than sufficient cash will be provided by GFANZ to meet the target.
According to former governor of the Bank of England Mark Carney, the transformation of the global financial system towards Net Zero is crucial to fight climate change and thus every financial decision should take its impact on climate change into account. The world will potentially achieve the 1.5-degree Celsius target with the help of GFANZ.
However, these claims might be exaggerated as per experts as only around one-third of the US $130 trillion figure may actually be dedicated to low-carbon investments over the highly crucial next decade.
RELATED READ: Can green banks be a reality in the UK?
Chancellor Sunak has been criticised for blocking green measures as he has hardly mentioned climate change in his Autumn Budget speech. Huge amounts of funds are still being channelised towards fossil fuels which must stop to keep the 1.5 degree C target alive. Developed nations must adhere to their pledges and face the credibility checks as developing nations are already disproportionately burdened with the impact of climate change. Climate finance and emission cuts should be among the top priorities of all Governments worldwide.