The Glasgow Financial Alliance for Net Zero (GFANZ) is reviewing standards set by a United Nations-tied climate change organization, Race to Zero, after several banks, including JPMorgan Chase, Bank of America and Morgan Stanley, suggested they may leave GFANZ, sources told Bloomberg and the Financial Times on Saturday.
GFANZ set out to dispel any rumors of unrest, issuing a statement Saturday that it “received no indication from any of [its] members that they intend to leave.”
GFANZ had previously said sticking to U.N. parameters was mandatory for the seven subgroups — which represent banking, asset management, insurance, pension and other prongs — to maintain their membership.
Some banks, however, have expressed concerns that they would run afoul of U.S. antitrust laws if they followed Race to Zero’s guidance on investment decisions, the Financial Times reported.
Race to Zero had said it could oust financial institutions if they didn’t comply with a June directive to “restrict the development, financing and facilitation of new fossil fuel assets.” That language, however, was softened last month to exclude an explicit reference to barring financing and investment in new coal projects.
Mark Carney, co-chair of GFANZ and the former governor of the Bank of England, publicly chided Race to Zero for going “too far,” according to Bloomberg.
Jakob Thomae, an advisory board member of GFANZ, told the wire service he expects some subgroups of GFANZ will sever ties with the U.N. campaign in favor of a more tailored decarbonization strategy.
A GFANZ spokesperson said the seven subgroups are independent organizations with their own governance structures, and they “are responsible for managing accountability of their members.”
“Any updates to the nature of their commitments rest with the alliances as outlined by their respective governance processes,” the GFANZ statement read.
Letting the finance groups set their own terms is risky, climate-sector observers said.
“Even before the revelations that some banks may leave GFANZ in opposition to real climate action, there were plenty of doubts that the alliance could really deliver on net zero,” Lucie Pinson, executive director at environmental nonprofit Reclaim Finance in Paris, told Bloomberg on Saturday. “The outcome of this issue will tell us decisively whether we should expect banks to lead the climate fight or act simply as agents of greenwashing.”
Regardless of rumor, the gulf between potentially actionable sets of guidance highlights an uphill battle that awaits as experts prepare to convene next month for the COP27 U.N. climate summit — a gathering whose last iteration was preceded by flurry of climate commitments from various financial institutions.
“Banks were happy to sign up to a big pageantry contest at COP26 and get a bunch of applause,” Justin Guay, director of climate finance strategy at the Sunrise Project, told the Financial Times. “But when they realized the world expected them to make good on what they said they would do, they have looked for convenient excuses to wiggle out of that responsibility.”
As it stands, at least three large banks or asset managers that sent their CEOs to last year’s climate summit will be sending lower-level representatives this year, Bloomberg reported.
BlackRock CEO Larry Fink won’t be going to next month’s gathering in Egypt, opting instead to attend a meeting of the asset manager’s board of directors, people familiar with his plans told the wire service.
BlackRock “looks forward to having a meaningful, senior presence at COP27 to engage with key stakeholders on one of the biggest themes for our clients,” it said in an emailed statement.
Likewise, Citi CEO Jane Fraser and Standard Chartered CEO Bill Winters, who each attended COP26 last year, will not be present this year, spokespeople for the banks told Bloomberg.