COP27 snapshots: NZAM has $21.8trn committed to achieve net zero 2050
Highlights from COP27’s finance day: GFANZ alliances publish targets and members still funding firms connected to deforestation.
From net zero financial alliances publishing reports and disclosures to Glasgow Financial Alliance for Net Zero (GFANZ) members still funding firms connected to deforestation, read Net Zero Investor’s highlights from COP27’s finance day.
NZAM announces initial targets for 86 investors
The Net Zero Asset Managers Initiative (NZAM) has announced that a total of 86 asset managers- the largest group to date- have disclosed their initial net-zero 2050 targets.
The latest disclosures, published on 9 November, take the total number of asset managers that have set initial targets to 169, with $21.8trn now committed to be managed in line with achieving net zero by 2050. The new signatories include Northern Trust AM and AllianceBernstein.
Launched in December 2020, the NZAM is an international group of asset managers committed to supporting the goal of net zero emissions by 2050 or sooner. It now has 291 members, with a total of $66trn of assets under management.
Rebecca Mikula-Wright, CEO of the Asia Investor Group on Climate Change (AIGCC) and the Investor Group on Climate Change (IGCC), said: “Global investor collaboration has been critical to progress towards net zero, and a holistic approach of engaging with policy makers and business is essential for the clean energy transition to accelerate and to scale the investment required by 2030, only 85 months away.”
Egypt’s NWFE Program represents an innovative approach that other countries can follow to catalyse a just, global transition and GFANZ is working actively to support this bold programme.
GFANZ group supports Egypt’s energy transition plan
The GFANZ Private Finance Working Group for Nexus for Water, Food & Energy (NWFE) has expressed their strong support for the Egyptian government’s plan for the energy transition through the NWFE.
The group comprises six financial institutions, which include the Bank of America, Citi, Commercial International Bank, Deutsche Bank, HSBC and Standard Chartered.
The plan aims to achieve inclusive and sustainable growth, low-carbon development and developing resilience and adaptability to climate change.
Mark Carney, co-chair, GFANZ and UN Special Envoy on Climate Action and Finance, said: “Egypt’s NWFE Program represents an innovative approach that other countries can follow to catalyse a just, global transition and GFANZ is working actively to support this bold programme.”
To convert net-zero ambitions into actions, GFANZ also released the Financial Institution Net-zero Transition Plans report at COP27.
The report provides pan-sector recommendations and guidance for credible net zero transition plans for financial institutions. It highlights four key financing strategies that collectively define transition finance.
GFANZ members investing in companies connected to deforestation
However, an analysis by Global Witness launched at COP27 has revealed that members of GFANZ are investing $8.5bn in companies linked to causing deforestation.
A report by the international non-governmental organisation found that members have continued to invest in agri-business companies that stand accused of mass-scale deforestation, such as Brazilian meatpacker JBS.
It highlighted that GFANZ members have acquired an additional 10 million shares in JBS since COP26, with Vanguard alone increasing investments in JBS by an estimated $12.4 million.
90% of NZBA’s members publish targets
The UN-convened Net Zero Banking Alliance (NZBA) has launched its first progress report, which highlighted that over half its members have set intermediate decarbonisation targets.
It also outlined that 90% of the 43 banks that were due to publish targets by the end of October have done so. The targets prioritise areas of NZBA’s member’s most carbon intensive business or their most significant financial exposures, which must be achieved by 2030.
Eric Usher, United Nations Environment Programme Finance Initiative head, said: “Much of the 60% of the global banking industry outside the alliance has made little effort to decarbonise. But with over half of its members having now set intermediate targets, the alliance is blazing a trail for other banks to follow and has built a clear roadmap for governments to leverage in creating policies that will support a more sustainable financial system.”
PAAO publishes progress report
The Paris Aligned Asset Owners (PAAO) Initiative has also published its first progress report and initial disclosures for the net zero transition.
It found that 98% of its signatories that have disclosed have established either a quantitative target or qualitative goal for increasing investments in climate solutions.
The PAAO represents over $33trn of assets under management and has a total of 57 signatories.
Alongside the report, initial target disclosures have also been published for a further 13 asset owners taking the total to 40 since the initiative launched in March 2021. The latest disclosures include targets from asset owners including AP7, Lloyds Banking Group Pensions Trustees Limited and Ilmarinen.
