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Our progress and plan towards a net-zero global economy

Our inaugural Progress Report shares what we have achieved to date – and what we seek to accomplish moving forward.

In this report, we detail the progress GFANZ has made in the six months since launching in April 2021 and share GFANZ’s near-term work plan and ambitions. In short, GFANZ has launched a programme of work to transform the financial system, drawing on the enormously valuable work of the many organisations that have driven climate action for years.

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“Only mainstream private finance can match the scale of climate action needed for the net-zero transition including meeting investment needs in emerging markets and developing countries. We cannot get to net zero through niche efforts; we must green the entire financial system, along with every sector of our economies. To mobilise the capital needed, GFANZ is accelerating the best practice tools and methodologies that are essential for ensuring that the climate is at the heart of every financial decision.”

– Mark Carney, GFANZ Co-Chair

About GFANZ workstreams

Since the launch of GFANZ in April 2021, the GFANZ Principals Group has set out an ambitious programme of work across seven workstreams. The workstreams are organized to drive the commitment, engagement, investment, and, ultimately, the alignment required to transition the financial system and global economy to net zero.

All workstreams incorporate the views of a diverse range of financial sector institutions and geographies — including banks, insurers, asset owners, and asset managers — as well as advisers from leading technical experts in the NGO community. They have set ambitious objectives while also recognising the need for pragmatism and urgency. Here are brief summaries of the seven workstreams.

Key progress to date

Building commitment

This workstream is focused on broadening the nature and number of financial firms committed to net zero. Before the launch of GFANZ, only investors had a clear way to join the movement, with limited representation from beyond Europe. There was no standardisation of what a credible net-zero commitment should look like for a bank, insurer, investment consultant, or a financial service provider. Now, in time for COP26, all key segments of the financial sector can commit to net-zero in line with the UN Race to Zero criteria and get involved in the work to accelerate the transition through dedicated subsector-specific alliances. Uniting these subsectors within GFANZ helps activate the entire value chain of the financial sector and drive systemic change.

Learn more about each sub-sector alliance

1 Membership and financial assets in Race to Zero prior to the launch of GFANZ

Mobilising private capital to EM&DCs

This workstream supports a significant increase in the flow of private capital to emerging markets and developing countries (EM&DCs) for their transition needs through private-sector investments and public-private collaboration. While GFANZ members represent at least $7+ trillion in assets in EM&DCs, there is significant untapped potential to further finance the transition in those markets, especially through innovative public-private financing partnerships. This workstream is committed to working with policymakers to help create a new financial architecture that will mobilise far more net-zero-aligned finance and investment into countries that are most vulnerable to impacts of climate change and require financing to help them transition to a net-zero future.

The focus has been on four specific avenues:

1. Identifying and scaling existing catalytic initiatives that demonstrate strong potential for impact;

2. Supporting the development of country platforms that will accelerate the enabling conditions for structuring bankable projects;

3. Developing a more structured program of engagement with the multilateral development banks and development finance institutions that are key to blended finance projects;

4. Setting out a replicable and standardised EM&DC-specific reporting framework that can reliably track the movement of GFANZ member assets into EM&DCs.

Mobilising private capital to EM&DCs

This workstream supports a significant increase in the flow of private capital to emerging markets and developing countries (EM&DCs) for their transition needs through private-sector investments and public-private collaboration. While GFANZ members represent at least $7+ trillion in assets in EM&DCs, there is significant untapped potential to further finance the transition in those markets, especially through innovative public-private financing partnerships. This workstream is committed to working with policymakers to help create a new financial architecture that will mobilise far more net-zero-aligned finance and investment into countries that are most vulnerable to impacts of climate change and require financing to help them transition to a net-zero future.

The focus has been on four specific avenues:

1. Identifying and scaling existing catalytic initiatives that demonstrate strong potential for impact;

2. Supporting the development of country platforms that will accelerate the enabling conditions for structuring bankable projects;

3. Developing a more structured program of engagement with the multilateral development banks and development finance institutions that are key to blended finance projects;

4. Setting out a replicable and standardised EM&DC-specific reporting framework that can reliably track the movement of GFANZ member assets into EM&DCs.

Sectoral pathways

This workstream engages and works with industries to catalyse alignment between financial institutions and major global industries on sector-specific pathways to reach net-zero emissions. It has developed a framework to articulate the needs and expectations of financial institutions for actionable sectoral pathways, incorporating work from both financial industry initiatives and sectoral organisations. Over time, more detailed guidance will be added to the framework to create a resource to help financial institutions evaluate sectoral net-zero pathways and assist efforts to develop new pathways. Tackling hard-to-abate sectors and fossil fuels is at the heart of this. The workstream has prioritised three sectors for initial focus — steel, aviation, and oil and gas — and has started working with ongoing and planned initiatives in these sectors, building on the large volume of work already being done on this topic.

“Grounded in the UN’s Race to Zero campaign, our pledge is to mobilise finance at scale to achieve net-zero emissions by 2050 or sooner and develop climate resilience around the world. Our focus is on near-term actions that drive systemic change and contribute to the 50% decarbonisation required by 2030. While we accept that this is a rapidly evolving space, we must not let uncertainty defer action any longer.”

– GFANZ Principals Group

Real-economy transition plans

This workstream focuses on accelerating decarbonisation in the real economy by articulating financial sector expectations of transition plans from the companies GFANZ members invest in, insure, and finance. Since its launch, this workstream has conducted a review of existing guidance for corporate transition plans and developed an initial set of principles to guide best practice transition planning, bringing together and building on the body of work that has already been developed. Over time this workstream hopes to promote upward convergence in the transition plans of our corporate clients and investees by providing both companies and financial firms our view of best practice.

Financial institution transition plans

This workstream drives convergence around sector-wide best practices for financial institutions to design and implement credible net-zero transition plans and tackling joint challenges in a consistent way. It will work with partner NGOs, researchers, and alliances to develop and promote the adoption of best practices on cross-cutting technical issues that financial institutions face as they work on their own transition plans, including the use of internal carbon pricing, role of carbon credits and managing issues of double-counting financed emissions. Since its launch, the workstream has compiled an inventory of existing guidance on financial institution transition plans and developed an initial set of principles to encourage upward convergence in the level of ambition of GFANZ members.

“We have drawn together 20 climate experts from nongovernmental organisations around the world to ensure that GFANZ’s work is held to the highest standards of ambition while keeping climate science at the heart of everything GFANZ does.”

– Nili Gilbert, GFANZ Advisory Panel Chair

Portfolio alignment measurement

This workstream supports the further development and effective implementation of portfolio alignment metrics for financial institutions and seeks to drive convergence in the way portfolio alignment is measured and disclosed. It was established in response to growing investor and lender interest in measuring portfolios’ alignment to the objectives of the Paris Agreement. This workstream builds on analysis conducted by the Portfolio Alignment Team for the TCFD on measuring portfolio alignment.

GFANZ Policy Call to Action

This workstream advocates for the public policy needed to help build a net-zero economy and meet the goals of the Paris Agreement. Our GFANZ Call to Action, launched in October 2021, includes specific policies including economy-wide net-zero targets aligned to 1.5 degrees C, reform of financial regulations to support the net-zero transition, phaseout of fossil fuel subsidies, pricing carbon emissions, mandatory net-zero transition plans, and climate reporting for public and private enterprises by 2024. It aims to unlock the trillions of dollars of climate finance required to support developing economies’ efforts to transition to net zero, which include working with farmers and businesses to stop illegal deforestation, providing viable alternatives and promoting sustainable regenerative agricultural practices, and supporting a just transition. The core of the financial system is ready to mobilise for net zero, and our Call to Action lays out the policy action needed to accelerate that transition.

Read the GFANZ Call to Action