How GFANZ wants to reduce emissions with money

DThe unimaginable sum of 130 trillion dollars is reported by the Glasgow Financial Alliance for Net Zero (GFANZ) as a contribution to reducing carbon dioxide (CO2) emissions to net zero. More than 450 banks, insurance companies, pension funds, stock exchanges and rating agencies, index providers and auditing firms are participating, who have “set themselves highly ambitious, science-based goals, including net zero emissions by 2050,” writes the GFANZ initiative, which was launched by the former central bank chief Mark Carney, who is now the UN Special Envoy for Climate Action and Finance.

130 trillion dollars – that is almost seven times the gross domestic product (GDP) of the USA, a good nine times the GDP of the EU countries and about 30 times the economic output of Germany in one year. The huge sum corresponds to 40 percent of the world’s total financial assets, said British Treasury Secretary Rishi Sunak. However, it is not the case that the 450 financial groups from 45 countries promise to invest this money specifically for climate projects. The number is simply the combined total assets of the financial companies, so every mortgage loan and security is counted. From Germany, GFANZ includes Deutsche Bank and Commerzbank, Allianz and Munich Re, Bavarian Supply Chamber, Deka and Union Asset Management and other members.

Climate protection is vaguely at the center of finances

What the 450 corporations have committed themselves to remained rather vague in Carney’s statement. They have committed their private capital “to transform the economy to net zero”. They wanted to contribute to the target by 2050, deliver their “fair share of a 50 percent reduction in emissions in this decade and then review their targets every five years”. All companies would report annually on their progress and the emissions they fund. Carney was quoted as saying: “The architecture of the global financial system has been transformed to create net zero.” Climate protection has moved from the edge to the center of finance. This will make it possible to invest 100 trillion dollars over the next three decades in order to build a future with clean energies. “GFANZ’s rapid and large increase in net zero capital commitments makes the transformation to a 1.5-degree world possible,” said Carney.

Finance Minister Sunak also used this horn, but remained just as vague. The world financial system will be “rewired for net zero,” said the conservative treasury minister at the UN climate conference in Glasgow. Great Britain should become the first “net-zero financial center in the world”. In order to prevent so-called greenwashing, a working group is to create a “gold standard” for renovation plans on a scientific basis. Climate groups such as the French Reclaim Finance Initiative complained that the GFANZ signatories had not committed to stop investing in fossil fuel projects.

The head of the world’s largest asset manager BlackRock, Larry Fink, said in Glasgow with a view to the rumored figure of 130 trillion dollars that it would be “much more difficult to use the capital” than just winning commitments from companies. Citigroup CEO Jane Fraser said that having consistent sustainability standards will make it easier for customers to invest in green projects.

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