Finance industry announces two coalitions to align with Paris Agreement goals

A group of major banks and financial institutions on Wednesday announced two United Nations-backed coalitions aimed at advancing the Paris climate agreement’s greenhouse-gas emissions goals.

The Glasgow Financial Alliance for Net Zero is comprised of more than 160 members, the largest such industry effort thus far, according to a statement released by the group Wednesday. The group has a total of more than $70 trillion in assets, which it said it will put toward advancing the agreement’s goals.

UN climate ambassador Mark Carney, a climate finance adviser to British Prime Minister Boris Johnson, will lead the initiative, according to the announcement.

“As countries around the world move to decarbonize, the large sums these institutions are dedicating to climate solutions reflect a growing understanding that the transition to a low-carbon global economy will be critical for their business models,” U.S. Climate Envoy John Kerry said in a statement Wednesday. “To be credible and effective as market signals, these financial commitments should adhere to clear definitions, metrics, and reporting.”

“Ultimately, the transition to this new economy will create a massive number of new jobs and increase our collective ability to tackle climate change,” he added.

Kerry and Treasury Secretary Janet Yellen both spoke Wednesday at an event announcing the formation of the alliance, which comes the day before world leaders are set to meet for a White House-hosted climate summit.

Separately, 43 banks announced the formation of the Net-Zero Banking Alliance, which will work to align the industry with Paris targets. All participants will set to-be-determined emissions reductions targets for 2030 within 18 months of joining.

In a statement to The Hill, Sierra Club Financial Advocacy Campaign Manager Ben Cushing said the banking alliance “reaffirms that the banking industry must align with the goals of the Paris Agreement and makes progress toward rigorous near-term targets and action this decade, not just vague promises for 2050.”

However, Cushing added that “banks’ most urgent and important task continues to be stopping fossil fuel financing, which is the only way any of these targets will be met.”

While he said U.S. banks that joined in the alliance, including Bank of America, Morgan Stanley and Citi, “are taking a small step toward faster action,” he castigated other major institutions such as JPMorgan Chase, Wells Fargo and Goldman Sachs for failure to “clear this low bar.”

“It’s clear that Wall Street isn’t going to take sufficient action to confront the climate crisis on its own, which further underscores the need for bold action from financial regulators, and we look forward to seeing the Biden administration implement strong regulations and safeguards to hold them accountable,” Cushing said.