Climate Coalition Adapts to Shifting Landscape
The world’s largest financial coalition dedicated to combating climate change is undergoing a significant transformation. This move comes on the heels of several high-profile banks, insurers, and asset managers opting out of the alliance.
A Shift in Strategy
The Glasgow Financial Alliance for Net Zero (GFANZ), established in 2021, will alter its relationship with its sub-groups. This change will allow companies to tap into GFANZ’s expertise and resources without having to align their operations with the Paris climate agreement. This shift is a response to the recent exodus of key members, citing political backlash and regulatory overlap.
A Challenging Environment
The past year has seen a significant backlash against climate-focused initiatives. Goldman Sachs Group Inc. and Wells Fargo & Co. recently quit the Net-Zero Banking Alliance, while a subgroup for insurers faced a mass exodus due to litigation threats. In 2022, an equivalent group for asset managers parted ways with Vanguard Group Inc., the world’s second-largest money manager.
GFANZ’s New Direction
Moving forward, GFANZ will open its doors to any financial institution committed to mobilizing capital and reducing barriers to financing energy transition. The alliance recognizes that private finance is crucial to achieving a global energy transition. As such, GFANZ will intensify its efforts to mobilize private capital in 2025 and beyond.
A More Inclusive Approach
Under the new structure, companies that aren’t members of a net zero group will be free to collaborate with GFANZ. This change may also make it easier for companies based in emerging economies to seek affiliation with the alliance.
GFANZ Under Fire
Despite its growth and prominence, GFANZ has become a target of US Republicans who accuse such alliances of functioning as anti-fossil fuel cartels. As investigations and lawsuits targeting pro-climate firms increase, the pressure on climate groups is expected to intensify with the return of President-elect Donald Trump to the White House.
A Key Player in Climate Finance
GFANZ has played a vital role in bringing together eight sector-specific alliances, spanning asset owners to venture capital. The alliance has also been instrumental in financing the early retirement of coal assets in Asia and providing guidance on transition planning and portfolio alignment.
Leadership and Expertise
GFANZ is co-chaired by Mark Carney, chair of Bloomberg Inc. and former Bank of England governor, and Michael R. Bloomberg, founder of Bloomberg News parent Bloomberg LP. With their leadership and expertise, GFANZ remains committed to mobilizing private capital and driving the global energy transition.
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