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Take Five: Fewer Fans for GFANZ

This week’s major stories impacting ESG investors, in five easy pieces.

The practical realities of the finance sector’s climate change commitments were in focus this week.

Fewer fans for GFANZ – It’s unlikely that Mark Carney has been wishing he was still a central banker, but the ex-BoE governor has probably had better weeks. The future of his Glasgow Financial Alliance for Net Zero was in question after media reports that major US banks were threatening to quit rather than accept legal risks that might arise from tougher membership rules. ECB supervisor Anneli Tuominen and UK NGO ShareAction were quick to point to the legal and reputation risks of not meeting climate commitments. Meanwhile other GFANZ members were telling the US Congress that the International Energy Agency’s Net Zero for 2050 roadmap – which rules out new fossil fuel exploration – was the “road to hell”, a view somewhat at odds with a recent assertion by Carney that there was “no rationale” for new coal financing. Given the disagreement among its members about how to decarbonise their business models, it was probably not the best week for GFANZ to publish advice to clients about how to structure their transition plans.

New York feels the heat – The combination of the 77th UN General Assembly and the 14th Climate Week NYC meant there was no shortage of attention paid to the climate crisis in New York this week – even the NYC Comptroller got in on the act. UN Secretary General Antonio Guterres suggested world leaders had taken their eye off the ball, and called on them to tackle “four burning issues” at COP27: more ambition on mitigation; fulfilling climate finance commitments; supporting adaptation and resilience; and “meaningful action” on loss and damage. To that end, COP27 President Sameh Shoukry appointed German and Chilean ministers to coordinate discussions on loss and damage in Sharm El Sheikh, calling it a step toward “realising consensus around an issue of major importance”.

Montreal calling – At least some UNGA participants were also looking beyond COP27 to the UN Convention on Biological Diversity’s COP15 in December, where the Global Biodiversity Framework is expected to be signed. Countries including Germany and Australia made new commitments to protect nature, while many others backed efforts – expected to be enshrined in the GBF – to protect at least 30% of the planet’s land and oceans by 2030. Speaking in New York, UNEP Executive Director Inger Andersen, noted that ‘30×30’ is just one of 21 elements of the draft framework, and urged governments to go beyond commitments to “hold each other and ourselves to account”.

No denying it – Not everyone in New York was pulling in the same direction. Surprisingly to some, given the role of international development banks in financing climate mitigation and adaptation solutions, World Bank President David Malpass refused to take repeated opportunities to deny his climate scepticism. “I’m not a scientist,” he said, at an event hosted by the New York Times. You shouldn’t be an international development banker either, said former UNFCCC head Cristiana Figueres.

Frack business – On her way to the UNGA, new UK PM Liz Truss declared she was willing to be unpopular in her single-minded pursuit of growth. She was certainly happy to ignore the entreaties of investors and corporates who wrote to her this week calling for net zero transition to drive recovery. Instead, Truss sanctioned the return of exploration for shale gas, marking also a departure from her predecessor’s moratorium. But not his attitude to business. Her administration’s attitude to net zero remains unclear, with its updated nationally determined contribution to the goals of the Paris Agreement offering new detail but no new commitments.

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