FleishmanHillard COP26 Daily Digest, Day 5: Thursday 4 November 2021
Wednesday’s finance-focused agenda at COP26 saw new commitments to ramp up climate finance and shift away from the financing of fossil fuel production, though not without scepticism.
The financial sector has been criticised for continuing to enable the expansion of non-renewable energy sources, as well as not developing adequate mechanisms to make climate finance more accessible for developing countries.
Progress in both areas is seen as vitally important to cut carbon emissions worldwide and will ease pressure on the sector’s corporate players as well.
Today’s COP26 Daily Digest also features a perspective on Germany’s opportunity – and barriers – for climate leadership after Chancellor Merkel, from Dr Sebastian Schwark, Partner and Head of Corporate Reputation at FleishmanHillard, Berlin.
CARNEY’S GREEN MACHINE RAMPING UP CLIMATE FINANCE
A coalition of international finance companies says they can deliver as much as $100 trillion of financing to help economies transition to net zero over the next three decades.
The Glasgow Financial Alliance for Net Zero (Gfanz), led by Mark Carney, former governor of the Bank of England, is a coalition of 450 banks, insurers, and asset managers across 45 countries that control around 40 percent of the world’s financial assets. It includes major brands such as HSBC, Bank of America and Santander.
But the campaign group Global Witness said any commitments would be “doomed to fail” unless governments delivered robust legislation to ensure accountability. At the same time, other financial sceptics question the reality of the size of the pledge. And numerous groups have challenged the announcement for allowing Gfanz’s members to continue to finance coal, oil and gas companies.
Meanwhile, the Confederation of British Industry said that while Gfanz was taking “steps in the right direction”, there is a need for globally consistent climate and sustainability standards from policy-makers.
CORPORATE MANDATES FOR LOW-CARBON FUTURE BLUEPRINTS
The UK aims to become the “first-ever net zero aligned global financial centre” after the treasury announced proposals to ensure the largest firms and financial institutions demonstrate how they plan to deliver climate change targets.
UK Chancellor Rishi Sunak told the COP26 conference that by 2023 companies listed on the London Stock Exchange must publish detailed plans about how they will transition to a low-carbon future, in line with the UK’s 2050 net zero target.
An expert panel would set the standards that the plans need to meet to ensure they are not just promotional. However, the UK Government said there was “not yet a commonly agreed standard for what a good quality transition plan looks like” and observers have challenged that the plans will not be mandatory.
Nevertheless, Chancellor Sunak said the changes would promote better and more consistent climate data, as well as “proper climate risk surveillance and proper global reporting standards.”
COUNTRIES PLEDGE TO STOP FINANCING FOSSIL FUEL DEVELOPMENT
More than 20 countries and financial institutions, including the European Investment Bank, are set to announce an end to financing fossil fuel development overseas. Instead, the money will be diverted to promoting green energy.
The Guardian reports the announcement will be made in Glasgow today when COP26 focuses on energy issues. Reports suggest that Denmark, Finland, Costa Rica, Ethiopia, Gambia, and the Marshall Islands are some of the countries taking part.
The move to divert funds from fossil fuels to low-carbon efforts could generate an estimated $8bn a year for clean energy and prevent the funding of any fossil fuel development, including gas.
Denmark has already announced it would be the first country to end public financing of fossil fuels abroad.
The Danish government said it would end international financing for investments, projects or activities that promote fossil fuels by the end of this year, with exemptions for some gas projects that meet “strict conditions” until 2025.
This COP26 Daily Digest is brought to you by the FleishmanHillard Cop26 Unit. For more information, please contact the FleishmanHillard COP26 team.
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