Building a global zero emissions economy to cut back greenhouse gas emissions is going to mean upending how countless businesses operate and cost trillions of dollars – a daunting task. Fortunately, financial firms are clearly taking the matter seriously, banding together into alliances to better address the problem. Financial net zero alliances hit the headlines again in April this year as former Bank of England governor Mark Carney – now the UK Finance Advisor for COP26 and the UN Special Envoy for Climate Action and Finance – launched the Glasgow Financial Alliance for Net Zero (or GFANZ).
Corralling the mighty weight of over 160 firms, GFANZ is doing essential work in the race towards carbon neutrality. Yet it is not alone – delve deeper into its connections and we learn that it was co-founded by the Net Zero Banking Alliance (NZBA). This in turn joins three further initiatives – and as we looked further, we became embroiled in an intertwined web of alliances.
Although initially appearing to be a Sisyphean task, navigating the web of financial net zero alliances gives a very real sense of the scale of the movement – how many financial companies have set net zero targets, for example. It also increasingly makes the Race to Zero look like an achievable goal.
Below is our timeline infographic of the evolution of Financial Net Zero Alliances. Please feel free to share it (tagging @GongComms) – we welcome collaboration and input to improve our work. We are aware this is an ever-growing universe; if you have additional financial alliances that you think ought to be represented in the network, please feel free to email us on NetZero@gongcommunications.com.
What does it mean to be a Net Zero company?
In short, being a Net Zero company means meeting the goal of net zero carbon emissions – or becoming carbon neutral – by 2050, in order to limit the global temperature increase to 1.5 degrees Celsius (in line with the Paris Agreement). While there is no standardised definition or criteria for use, society is becoming increasingly wary of greenwashing. All of the financial alliances for net zero listed in this article require their signatories to be transparent about their goals and to set science-based targets. The Collective Commitment to Climate Action (CCCA) has published a set of guidelines for climate targets setting for banks that underpin the NZBA (and can be downloaded here).
Is there an overview of all of the financial net zero alliances?
We couldn’t find one, which formed the basis of our own research. By way of overview: beyond GFANZ, the Net Zero Banking Alliance (NZBA) is a collection of 43 of the world’s biggest banks (including Bank of America, BNP Paribas, Barclays, HSBC, Santander and UBS) – which in turn joins three existing initiatives, namely the Net-Zero Asset Owner Alliance (AOA), the Net Zero Asset Managers Initiative and the Paris Aligned Investor Initiative. It incorporates the insurance industry (with the soon-to-be-launched Net Zero Insurance Alliance (NZIA), the internationally-led Asia Investor Group on Climate Change (AIGCC) and the Investor Group on Climate Change (Australia and New Zealand). In turn, both of these are part of Climate Action 100+, an investor-led initiative to ensure the world’s largest corporate greenhouse gas emitters take necessary action on climate change.
One of the original financial net zero alliances, Bankers for Net Zero is run in partnership with Volans, which has recently published a must-read white paper on aligning finance to a net zero economy.
How many financial companies have set net zero targets?
The good news is that the number of financial companies that have set new zero targets is increasing almost too quickly to assign a meaningful number. In September 2020, the United Nations Framework Convention on Climate Change (UNFCCC) reported that the number of net-zero commitments from local governments and businesses had more or less doubled in less than a year, mainly from members of the UN Race to Zero campaign.
Our research into the financial alliances for net zero indicates nearly a thousand large financial institutions are now part of one or more alliance, with thousands more signatories to the UN’s Principles for Responsible Investment.