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‘No blah blah’ as Private Sector Unveils Commitment for Climate Finance at COP 26

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The commitment comes with a pathway by which the companies involved, included most of the major Western banks, must use science-based guidelines to reach net-zero emissions by 2050, and commit to interim goals towards a 50 per cent reduction by 2030, and even a 25 per cent reduction in the next five years.
A women's cooperative is using solar energy to operate the borehole that supplies water to the market garden.
Nearly 500 global financial services firms agreed on Wednesday to align USD 130 trillion; 40 per cent of the world’s financial assets, with the climate goals, set out in the Paris Agreement.  

Mark Carney, the UN Special Envoy for Climate Action and Finance, assembled the Glasgow Financial Alliance for Net Zero, a group of bankers, insurers and investors who now have committed to putting climate change at the centre of their work.  

The commitment comes with a pathway by which the companies involved, included most of the major Western banks, must use science-based guidelines to reach net-zero emissions by 2050, and commit to interim goals towards a 50 per cent reduction by 2030, and even a 25 per cent reduction in the next five years. This means the companies must adjust their business models, develop credible plans for the transition, and implement them.  

“The core message today is that the money is there, the money is there for the transition, and it’s not blah blah blah,” Carney told delegates during a COP-26 climate finance event. The former Governor of the Bank of England underscored that he sees Net Zero as the critical infrastructure of the new financial system. 

According to the Alliance, private finance can help fund private sector initiatives and turn billions committed to climate investment through public channels into trillions of total climate investment. But unlocking systemic change will require collaborative, ambitious commitments, and near-term action across the entire financial system.  

“Up until today there was not enough money in the world to fund the transition; this is a watershed,” Carney told the COP plenary.   According to Patricia Espinosa, the Executive Secretary of the UN Framework Convention on Climate Change (UNFCCC), there is no doubt that there must be a deep transformation of the world’s economy and the private sector must be part of it.  

“The private sector is realizing that climate risks are very important for their portfolios and they need to align them to a more sustainable way of doing things,” she told journalists at a press conference.   

Meanwhile, for the head of the UN Environmental Programme (UNEP), the new alliance with the private sector is “an absolutely critical cause.

“Our Emissions Gap Report shows it: there are about 500 gigatons left (of CO2 emissions), with the current NDCS (national emission reduction plans), we have taken 4 gigatons (from emissions), but we are emitting 55 a year. This doesn’t compute… There are some real opportunities for the finance sector, we need to stay out from coal, oil, and gas,” Inger Andersen explained.  

Guenther Thallinger, from the German multinational financial services company Allianz, expressed their commitment to the Glasgow Financial Alliance.   “It all starts with changing the decision making that we all have as financial institutions. Climate impact needs to be integrated into the decision making, that’s why interim targets are so important. We have all set this type of targets, and it’s very important that they are fairly short term”, he told a panel reunited at the Action Zone of COP26. 

“We are literally here creating a new industry, new ground rules for a new industry that is prioritizing climate action. For that we need all the traditional things, we need measurement, we need metrics, we need reporting…I want to take the opportunity to share that we will be announcing our first round of interim targets”, added Audrey Choi, Chief Sustainability Officer of Morgan Stanley.  

At COP15 in 2009, climate finance funding of USD 100 billion a year by 2020 was agreed to support resilience, adaptation, and energy transitions in developing countries. The promise is now officially delayed to 2023.   However, COP26 President Alok Sharma delivered some good news: 90 per cent of the world’s economy is now covered in a net-zero target. Only 30 per cent was committed at the beginning of 2020. 

“It is regrettable that we are highly unlikely to meet the USD 100-billion goal in 2021, but based of the information submitted by donors, the analysis shows that developed countries will make significant towards the 100-billion-dollar goal in 2022, and I believe it also provides confidence that we will meet it in 2023”, he said during a press conference on Wednesday. 

Earlier in the day, and referring to the same matter, UK Chancellor Rishi Sunak urged developed countries to boost their support to developing countries, including by helping them tap into the trillions of dollars committed to net zero by the private sector.

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