The umbrella group of global financial institutions co-founded by former Bank of England Governor Mark Carney is in urgent talks to review the terms of supervision by the United Nations climate change body, according to people familiar with the group.
The disagreement underscores the scale of the challenge facing world leaders next week at the annual meetings of the International Monetary Fund and World Bank and at the upcoming COP27 United Nations climate summit, as they seek to pool climate action in the face of acute concerns about energy security.
US banks, including JPMorgan, have suggested they may withdraw from the so-called Glasgow Financial Alliance for Net Zero (Gfanz), citing concerns that they could risk violating US antitrust laws if they take guidance on investment decisions from a campaign United nations.
A UN body called Race to Zero sets standards to ensure that business groups submit credible climate change goals and plans in exchange for their seal of approval.
Gfanz previously said adherence to the UN restrictions was a necessary condition for the sub-groups representing the banking, asset management, insurance and pension sectors to join and remain part of the alliance.
On Saturday, it said it had “received no indication” from its members of their willingness to leave the group, but noted that the financial institutions were independent, “managed by and subject only to their own governance structures”.
“Any updates to the nature of their obligations lie with the alliances as outlined in their respective governance processes,” she said.
This effectively frees some of the world’s largest financial institutions from binding UN restrictions on their investments and financing of fossil fuel assets.
In the United States, Republican politicians and officials singled out Govans and his members, including BlackRock, which sits on the coalition’s steering committee, for its criticism that fiduciary duty could be jeopardized by concerns about environmentally conscious investing.
Gfanz’s re-examination of its oversight structure linked to the UN aims to make a bid to ensure continued support for all of its members, according to those evaluated from the discussions.
The Race to Zero campaign previously said it could fire financial institutions if they did not comply with the requirement issued in June to “restrict the development, financing and facilitation of new fossil fuel assets”.
That wording was later weakened last month, to drop an explicit “no new coal” directive that prevents members from financing or investing in new coal projects, following a backlash from some Ghavans parties as well as legal advice that their employees could fall into the grip of competition law as a result of the language. binding.
A large-scale church finance climate movement crystallized under the Gfanz umbrella when it was founded in April of last year. It has boasted about $130 trillion in assets by the time of the UN’s COP26 climate conference in Glasgow in November, which is designed to serve as a forum for some of the world’s largest banks, asset managers, insurance companies and pension funds to coordinate efforts to reduce carbon. emissions.
Co-led by Carney, who is now vice president of Brookfield Asset Management, as well as businessman Michael Bloomberg, it has so far relied on Race to Zero to set high-level rules about how quickly and rigorously it transitions away from fossil fuels and the methodologies used to uncover climate risks. Individual sector groups within Gfanz, including the Net Zero Banking Alliance, set policy within these parameters and are individual “partners” in Race to Zero with their separate relationships with the group.
Aside from the legal concerns that have been cited, the shifts by Gfanz members are also a sign of ingrained differences among scholars, civil society groups, and financial institutions about whether investors should divest tainted assets and whether they should refuse debt financing for new high-profile projects. emissions.
Since joining Gfanz, US banks have continued to provide financing to companies building new coal-fired power plants and infrastructure, including Japanese energy giants Mitsubishi and Marubeni Corp., according to the NGO Reclaim Finance.
JPMorgan Chase is the largest financier of fossil fuel projects since the 2015 Paris Agreement, according to data from the RAN Climate Campaign, which stretches to $382 billion.
“Banks were happy to sign up for a big queen contest at COP26 and got a lot of applause,” Justin Guay, director of climate finance strategy at the Sunrise Project campaign network, told FT. “But when they realized that the world expected them to do what they said they would do, they looked for convenient excuses to shirk that responsibility.”
Race to Zero declined to comment.
Originally published at San Jose News Bulletin
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