‘Critical’: Mark Carney launches Net Zero Financial Services Providers Alliance
17 organisations spanning breadth of financial service industry form financial sector’s newest climate-focused coalition
Global credit rating agencies, stock exchanges, index providers, credit ratings agencies, and auditors have come together to form the Net Zero Financial Services Providers Alliance, pledging to align their products and services with global climate goals.
The London Stock Exchange Group, Deloitte, KPMG, EY, PwC, S&P Global, and Moody’s Corporation are among the 18 founding members of the Alliance, which will be launched today by UN special envoy on climate action and finance and former Bank of England governor Mark Carney.
All members of the Net Zero Financial Services Providers Alliance must commit to aligning “all relevant products and services” to achieving net zero greenhouse gas emissions by 2050 at the latest. They have also committed to set “meaningful” interim targets for 2025 within 12 months of joining the group and taking steps to reducing their operational emissions in line with limiting global temperature increases to 1.5C.
In a statement, the Net Zero Financial Service Providers Alliance said its launch marked a “significant step forward” in the financial system’s transition to net zero, noting that progress towards the goal would rely on critical services and products that inform decisions made by companies, banks, asset managers and owners being aligned with global climate goals. “The data, products and services of financial service providers are among the critical components informing the flow of capital,” it said.
The alliance’s launch comes less than a week after research from Carbon Tracker warned auditors were failing to adequately account for climate risk in their assessment of companies’ accounts.
The Net Zero Financial Services Providers Alliance will join the Glasgow Financial Alliance for Net Zero (GFANZ), the umbrella group launched by Carney earlier this year to unite the various net zero alliances formed within the financial sector.
“The new Net Zero Financial Service Providers Alliance will be critical to helping the financial sector achieve net zero,” Carney said. “By joining the alliance and GFANZ, these firms are committing to ensuring their products and services support a high ambition, credible net zero transition that we need to achieve our 1.5-degree goal.”
The group is the fifth major net zero alliance to have been launched in the financial sector over the last two years, following in the footsteps of the Net Zero Asset Owner Alliance in September 2019, the Net Zero Asset Managers last December, the Net Zero Banking Alliance in April this year, and the Net Zero Insurance Alliance in July.
COP26 President Alok Sharma also applauded the launch of new initiative. “Helping to mobilise the finance needed to accelerate the transition to net zero by mid-century is crucial to save our planet from the worst effects of catastrophic climate change,” he said. “These new commitments from major financial services providers show great climate leadership towards helping us to net zero.”
The launch of the Net Zero Financial Service Providers Alliance comes as dozens of financial institutions – with more than $10tr of assets under management – have come together to call on governments to establish an “ambitious and transformational” post-2020 Global Biodiversity Framework (GBF) at the upcoming COP15 Biodiversity Summit.
In a public statement published on Tuesday, the 78 institutions behind the appeal said the policies that flow from an ambitious Framework would accelerate and scale up much-needed private capital flows that could drive a net zero and nature-positive economy.
“The next draft of the GBF should more accurately reflect the sense of urgency and the level of ambition required to protect and restore biodiversity,” the statement reads. “It is essential that the GBF highlights the important role that financial institutions and the private sector can and should play in delivering the 2030 milestones and the 2050 goals.”
The appeal calls on governments to amend the current draft version of the GBF to include an “explicit expectation” for financial institutions and businesses to align financial flows to support global biodiversity goals in the landmark biodiversity agreement, backed by appropriate regulatory measures and financial incentives.
Coordinated by the non-profit Ceres and the Finance for Biodiversity Foundation, the campaign also calls on world leaders to strengthen their national biodiversity strategy and action plans (NBSAPs) so as to ensure the GBF can be successfully enacted once complete and is backed by domestic policies that deliver on global biodiversity targets.
It also calls for all subsidies that are harmful to biodiversity to be removed and for the creation of a regulatory environment that enables financial institutions to address biodiversity-related risks and opportunities, starting with the introduction of consistent and decision-useful corporate disclosure requirement.
