Global financiers cool over COP26 fuel targets

Less than one month before the start of the COP26 climate change summit in Glasgow, leading international banks are reportedly showing reluctance to sign up to the most direct way of reducing greenhouse gas emissions to net zero by 2050.

In April this year, the former governor of the Bank of England, Mark Carney, set up a group called the Glasgow Financial Alliance for Net Zero (Gfanz), which drew support from almost 300 global financial bodies with combined assets of $90 trillion.

But just weeks away from the start of the gathering of world leaders, which United Nations Secretary General Antonio Gutteres has called "a critical milestone in our efforts to avert climate catastrophe", the Financial Times reports that Gfanz negotiators have failed to convince many major banks to put an end to financing new fossil fuel exploration projects.

Instead, many of the 59 banks are more interested in trying to achieve targets set by global warming scenarios presented by the UN-backed International Panel on Climate Change, which although it has much in common with the Gfanz report, allows for continued financing of such projects.

Carney's plan follows guidelines published by the International Energy Agency (IEA) in May this year, but a source close to the bank discussions told the FT that organizations were reluctant to sign up for them as "they think it's a fairy tale".

More pressure has been put on Carney by the publication of a letter in several newspapers around the world, including the FT, written on behalf of around 90 climate groups, urging him "to stop greenwashing financial institutions that continue to invest in expanding fossil fuel infrastructure" by failing to win them over to the IEA proposals.

"There is growing concern that in the run-up to the conference, financial institutions are using industry initiatives like Gfanz as cover for their continued support for coal, oil and gas expansion," explained the letter.

Richard Brooks, climate finance director at Canada-based environmental protest organization Stand.earth, said Gfanz's work was almost being counter-productive.

"The membership requirements for these net zero initiatives are set too low and as a result these alliances are doing the opposite of what they're supposed to," he said. "Rather than forcing banks and other financial institutions to step up their climate action, they're giving them the cover to continue their dirty financing of fossil fuel companies. We are running out of time and can't waste it on more greenwashing talk."

In a recent speech in his native Canada, Carney also spoke of the need for economies to take preemptive action in dealing with the human fall-out of the move towards a greener economic future, by helping workers whose jobs will be impacted.

" (We need to ensure) that the resources of a country, Canada in this case, can be properly dedicated to retraining, to building the resources of the future, to reinvest in the areas that are undergoing these adjustments," he said. "And now is the time to do it－not at some cliff－edge point down the road when there is a sharper adjustment."