Memo on Finance Day at COP 28: US Banks, US Regulatory Agencies, and GFANZ

Monday, December 4, is Finance Day at COP 28, where the UN’s leading climate change conference will focus on the financial sector’s role in curbing climate change through regulatory policies from government agencies, voluntary commitments from the private sector, and more.

The Sierra Club’s Fossil-Free Finance campaign works closely on these issues. Here’s a rundown of our latest news, reports, and more, to help you cut through the greenwashing during Finance Day at COP 28.

US banks and asset managers continue to finance fossil fuels

In November 2023, JPMorgan Chase, the largest U.S. bank and the world’s biggest funder of fossil fuels, released its updated climate strategy. The bank took some encouraging steps, including disclosing its absolute financed emissions and adjusting its sectoral emissions reduction targets, and now surpasses some of its peers for its quality of disclosures around its capital markets activities. However, there were some troubling elements, including its updated approach to reducing emissions in the oil and gas sector. Read more.

A June 2023 report assesses how effectively the climate policies of the world’s largest asset managers have translated to real-world emissions reductions in the fossil fuel sector, revealing that companies like BlackRock, Vanguard, and State Street are well behind the curve of where they need to be in order to hit global climate goals. Read more.

A July 2023 report on the role of big US banks in capital markets revealed a hidden pipeline for fossil fuel financing through the banks’ underwriting of bonds and equities for polluting companies. The analysis raises important questions about how the 6 biggest US banks calculate and report on their facilitated emissions, and makes the case for the importance of banks’ capital markets activities in achieving real-world emissions reductions. Read more.

An August 2023 report revealed that major global banks are propping up deadly coal plants across the U.S. by financing the parent companies that own them. This financing comes despite the fact that many banks have climate commitments that restrict them from providing project-level loans to coal plants, revealing a massive loophole. Read more.

Expected at COP: Reuters has reported that France and the U.S. potentially plan to seek a halt to private financing for coal-based power plants during COP 28. Sierra Club experts will be available to comment. Read more.

US regulatory agencies make moves on climate risk

The Securities and Exchange Commission’s climate risk disclosure rule is expected soon. As jurisdictions like California and the EU move forward with their own climate disclosure laws, the SEC’s ruling is being watched closely for its impact on companies and investors in the U.S. The Sierra Club has submitted multiple rounds of comments on the rule. Read more.

An October 2023 analysis revealed that there should be no added compliance costs for 75% of the largest public companies to disclose their greenhouse gas emissions under the upcoming SEC climate risk disclosure rule, since they are likely already covered by new disclosure rules in California. Read more.

Other US agencies have recently announced their own climate-related guidance, including:

• In November 2023, the Financial Stability Oversight Council (FSOC) published guidance making it easier to designate nonbank companies like asset managers and insurance companies as systemically important institutions that need enhanced regulation. Read more.
• In October 2023, the Federal Reserve, the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) announced their interagency guidance for how large banks should manage climate-related risks in order to protect the stability of the broader financial system. Read more.
• In October 2023, the Federal Reserve, OCC, and FDIC modernized the regulations implementing the Community Reinvestment Act (CRA), a landmark civil rights law passed in response to the banking industry’s continued failure to fairly serve low-income communities and communities of color. Read more.

What’s next for GFANZ 

In November 2023, the Glasgow Financial Alliance for Net Zero (GFANZ) proposed a new method for financial institutions to measure their decarbonization impact, which advocacy groups called “opaque, easily manipulated, and likely counter productive” and at risk of being used to justify continued high levels of finance for fossil fuel companies without putting any meaningful pressure on them to change. Read more.

Expected at COP: GFANZ is expected to release the final version of its transition finance guidance during COP 28. A side event hosted by the Rocky Mountain Institute (RMI) will also address transition finance. An open letter published ahead of COP 28 by RMI on behalf of 11 organizations including the Sierra Club calls for the increased deployment of transition finance. Read more.

• Monday, December 4, 12:00 to 13:00 GST, by-invitation session on “Unlocking transition finance through common definitions”
• Monday, December 4, 13:00 to 13:45 GST, hybrid panel presentation on “Transition finance: From transition plans to transactions” (livestream link available here)

Media interviews

Eva Hernandez, Managing Director at the Sierra Club, is attending COP 28 and is available to comment from 9am to 5pm GST. Please contact jonathon.berman@sierraclub.org and CC fossilfreefinance@sierraclub.org. 

Ben Cushing, campaign director with the Sierra Club’s Fossil-Free Finance campaign, is available to comment from 7am to 2pm ET (4pm to 11pm GST) on any financial sector announcements made at COP 28. Please contact ben.cushing@sierraclub.org and CC fossilfreefinance@sierraclub.org.

Adele Shraiman, senior campaign strategist with the Sierra Club’s Fossil-Free Finance campaign, is available to comment from 9am to 4pm GMT (1pm to 8pm GST) on any financial sector announcements made at COP 28. Please contact adele.shraiman@sierraclub.org.