Ginny Cleaveland, Deputy Press Secretary, Fossil-Free Finance, Sierra Club, ginny.cleaveland@sierraclub.org, 415-508-8498 (Pacific Time)
NEW YORK — The Glasgow Financial Alliance for Net Zero (GFANZ) announced yesterday it would no longer require its members — including major financial sector net-zero alliances — to sign on to the emissions reduction criteria set by the UN’s Race to Zero campaign.
GFANZ said in a progress report that its alliances “are independent initiatives subject only to their individual governance structures” with “sole responsibility” for changes to their membership criteria, and that the alliances would “take note of the advice and guidance” of Race to Zero and other bodies, including the International Energy Agency.
The move came after US banks JPMorgan Chase, Bank of America, and Morgan Stanley reportedly threatened to leave GFANZ, and the associated Net Zero Banking Alliance (NZBA), over concerns that updated Race to Zero criteria around financing of new fossil fuel projects may make the banks vulnerable to legal challenges from fossil fuel-aligned politicians.
In response to the news, Adele Shraiman, Campaign Representative with the Sierra Club’s Fossil-Free Finance campaign, called on GFANZ to ensure its members stay committed to credible, robust, science-aligned policies on net zero.
The updated Race to Zero criteria affirmed what has been obvious for years: in order for banks' net-zero commitments to be credible, they must explicitly commit to phase out financing for new fossil fuels. Now, GFANZ and its associated alliances, including NZBA, must decide how to guide some of the world’s largest banks toward the credible, robust, and science-aligned policies that are necessary for meeting the climate goals they have committed to.
Without explicit commitments to phase out financing for fossil fuel expansion, financial institutions will not be aligned with what leading climate scientists and energy experts tell us will be necessary to keep global temperature rise below 1.5C. If the various alliances in GFANZ want to maintain credibility and enforce robust standards on their membership, their guidance must reflect this reality. What's most important is for banks and other financial firms to actually meet their own net-zero commitments, and for global alliances like GFANZ to uphold high standards for its members. Whether NZBA holds its members accountable via its own governance or via Race to Zero’s criteria isn't what matters most — the strength of banks' commitments, and their plans to meet those commitments, is.
Ultimately, global alliances and initiatives like GFANZ and Race to Zero are just a means to an end. What’s most important is the outcome: getting the financial sector to make strong commitments, and actually have credible plans to follow through on those commitments. Moving forward, GFANZ and its associated alliances face the challenge of upholding robust, credible, science-backed guidance, without alienating its members or diluting the impact.
###
About the Sierra Club
The Sierra Club is America’s largest and most influential grassroots environmental organization, with millions of members and supporters. In addition to protecting every person's right to get outdoors and access the healing power of nature, the Sierra Club works to promote clean energy, safeguard the health of our communities, protect wildlife, and preserve our remaining wild places through grassroots activism, public education, lobbying, and legal action. For more information, visit www.sierraclub.org.