GFANZ has developed a draft framework for financial institutions to catalyze action and specify concrete steps and holistic business strategy changes as part of the transition to a net-zero future.
This Net-zero Transition Plan framework for financial institutions is now open for public consultation until 27 July 2022.
15 June 2022 – Today, the Glasgow Financial Alliance for Net Zero (GFANZ), a practitioner-led, global coalition of financial institutions working to accelerate the world’s transition to net-zero greenhouse gas (GHG) emissions by 2050, invited public comment on its draft Net-zero Transition Plan (NZTP) framework for the financial sector. This common framework will enable a financial institution to demonstrate, and stakeholders to judge, the credibility of its plan to accelerate and scale clean energy and transition-related finance to levels consistent with limiting global warming to 1.5 degrees C.
Around 130 countries, representing 90% of global GDP, have made a net-zero commitment. More than 10,000 companies, organizations, or subnational governments have joined the UN Race to Zero campaign, committing to achieve net-zero carbon emissions by 2050 at the latest. Net-zero transition plans catalyze action, operationalize commitments, and demonstrate credibility. GFANZ defines a net-zero transition plan as a set of goals, actions, and accountability mechanisms to align an organization’s business activities with a pathway for net-zero GHG emissions that delivers real-economy emissions reductions in line with achieving global net zero.
Michael R. Bloomberg, Co-Chair, GFANZ and UN Special Envoy for Climate Ambition and Solutions
“The climate crisis requires ambitious action and the biggest changes must happen without delay. Businesses require clear guidance from governments to meaningfully address climate change—and GFANZ is taking the lead by providing this information to the global financial industry.”
Mark Carney, Co-Chair, GFANZ and UN Special Envoy on Climate Action and Finance
“The GFANZ common framework for net-zero transition will help ensure that capital will flow to companies that have robust and credible plans to reduce their emissions while growing jobs and our economies. The supporting tools will promote the responsible and transparent phaseout of stranded assets as part of an orderly transition. Together, these tools, frameworks, and resources will guide the financial sector to support real-world decarbonisation, not the false comfort of portfolio decarbonisation. In the process, they will reveal the contribution of financial institutions to solving one of humanity’s greatest challenges.”
Mary Schapiro, Vice Chair, GFANZ
“To cut global emissions in half by 2030 and meet the goal of net-zero emissions by 2050, we need to significantly scale up private capital to companies and assets that are enabling the net-zero transition. But without a clear framework for the transition, progress will be difficult to achieve. Filling the gaps of ambitious climate public policies and regulation, GFANZ has developed a global baseline for financial institutions to turn their commitments into immediate action.”
Delivering on net-zero commitments is only possible if transition planning aligns financial institutions’ core businesses with the reduction of GHG emissions in the real economy.
As part of the recommendations and guidance published, GFANZ has identified four essential approaches for financial institutions to support the real-economy transition to net-zero emissions:
- Finance the development and scaling of net-zero technologies or services to replace high-emitting sources
- Increase support for companies that are already aligned to a 1.5 degrees C pathway
- Enable high and low-emitting real-economy companies to align business activity consistent with a 1.5 degrees C pathway for their sector
- Accelerate managed phaseout of high-emitting assets through early retirement
In addition to the Net-zero Transition Plan framework for financial institutions, which is now open for public consultation, GFANZ has published a set of connected tools, frameworks, and resources to enable the extensive collaboration between financial institutions, real-economy companies, the public sector, and civil society to support a global whole-economy transition to net-zero. The resources include:
- Guidance on Use of Sectoral Pathways for Financial Institutions
- Concept note on Portfolio Alignment Measurement
- Introductory note on Expectations for Real-economy Transition Plans
- Report on the Managed Phaseout of High-emitting Assets
While the focus is on providing guidance for financial institutions’ implementation of transition strategies, the recommendations and guidance also aim to provide clear, consistent, and decision-useful information needed by companies, regulators, governments, and other stakeholders.
Nigel Topping and Mahmoud Mohieldin, High-level Climate Champions for COP26 & COP27
“We welcome GFANZ’s pan-sector Net-Zero Transition Plan (NZTP) guidance and accompanying frameworks as important tools for helping the financial institutions in the UN Climate Champions’ Race to Zero to translate their net zero commitments into actionable plans with real-economy impact. The consultation process is an opportunity for financial institutions to demonstrate leadership in helping to shape the best practices that will drive the ambitious climate action we need to achieve the Paris goals.”
Nili Gilbert, Chair, GFANZ Advisory Panel, and Vice Chairwoman, Carbon Direct
“As we move further into the net zero transition, companies that have made pledges are acting on implementation, and companies which have yet to make pledges are seeking to understand their own starting approach. The clarity offered in the Net Zero Transition Plan for Financial Institutions report will support institutions at all stages of the process, and represent a critical step in the accountability, action and ambition of the finance sector’s push towards net zero.”
Oliver Bäte, Chief Executive Officer, Allianz SE
“The net-zero transition is an opportunity for global finance to lead. Financial institutions need to be able to translate climate science into tools that help align their businesses to the transition. In turn, these institutions can operationalize decarbonization pathways for all the industries they finance.”
Amanda Blanc, Group Chief Executive Officer, Aviva
“Ambition is not enough – a net-zero transition plan lays out the steps for financial institutions to generate a plan and execute against it. We cannot wait for all the answers – the time is now.”
David Blood, Senior Partner, Generation IM
“For financial institutions to transition successfully to net zero, we need a forward-looking approach to measure how portfolios align to the transition. While the financial sector has started to develop these tools, we aim for further enhancements to ensure that they are robust and easy to use.”
Thomas Buberl, Chief Executive Officer, Axa
“Because the financial sector is interconnected and truly global, all institutions must take responsibility for their transition to net-zero. GFANZ supports ambitious, concrete net-zero goals and transparent intermediate targets from all actors in the economy so that our actions can help put the world on the right course to tackle climate change.”
Jane Fraser, Chief Executive Officer, Citi
“Now is the time for the financial sector to deliver on our commitments, and having a common framework for action will help ensure there is an immediate and collective response to climate change. Reaching net zero will be one of our generation’s biggest challenges and will require that we finance the transition responsibly across every high-carbon sector and asset class.”
Noel Quinn, Group Chief Executive, HSBC
“We have a coalition of the willing in the financial sector to reach net zero, but now is the time to put the detail into the plans that will get us there – we need to explain the journey and how we will deliver our commitments. This must be informed by experts both within and outside our industry, so I encourage all interested parties to contribute to this consultation.”
Alison Rose, Chief Executive Officer, NatWest
“If we are to limit global warming below 1.5 degrees Celsius and stay on track to meet the ambitious goals set out in the Paris Agreement, we need to make a collective effort as a sector to accelerate the transition of the global economy to net zero. This framework provides practical and tangible guidance to help financial institutions and the real economy play their part in tackling this critical global challenge.”
David Schwimmer, Chief Executive Officer, LSEG
“The financial sector has an essential role in enabling real-economy emissions reductions, and the only way to do that is through companies producing credible transition plans setting out how they will achieve their net zero targets. GFANZ is working on developing the financial sector’s expectations of real-economy companies to make that a reality.”
The Glasgow Financial Alliance for Net Zero (GFANZ) is a practitioner-led, global coalition of financial sector institutions and their sector-specific alliances working together to accelerate the world’s transition to net-zero greenhouse gas emissions by 2050 and achieve the objective of the Paris Agreement to limit global warming to no more than 1.5 degrees C. GFANZ has united over 500 member firms from across the financial sector, including banks, insurers, asset owners, asset managers, financial service providers and investment consultants, spanning 45 countries and representing around 40% of global private financial assets.
Further details can be found on https://www.gfanzero.com.