Financial institutions allied to the Glasgow Financial Alliance for Net Zero (GFANZ) have funded at least 211 of the world’s largest expanders of coal mining, transport and power, oil and gas production and transport according to research from Reclaim Finance.
Reclaim Finance analysed the financing and investment in “fossil expansionists” of 161 of the members of the most significant GFANZ sectoral alliances: the Net-Zero Banking Alliance; Net Zero Asset Managers initiative; Net-Zero Asset Owner Alliance; and Net-Zero Insurance Alliance in a report, “Throwing fuel on the fire: GFANZ financing of fossil fuel expansion.”
The organisation is an NGO affiliated with Friends of the Earth France. It was founded in 2020 and said it is 100% dedicated to issues linking finance with social and climate justice. The report said: “Financing new coal mines or oil and gas fields will either lock-in decades of carbon-budget breaking emissions or be stranded by changing economics or regulations.”
For example, Citi, BNP Paribas, HSBC, Mitsubishi UFJ and Société Générale are all founder members of the Net-Zero Banking Alliance (NZBA). The report said: “A month after NZBA was launched, all participated in a massive $10 billion syndicated loan to Saudi Aramco, the company with the largest global oil and gas expansion plans.”
By joining GFANZ financial institutions commit to reaching net zero by 2050, the 1.5°C target for reducing emissions, and to taking immediate action to halve emissions by 2030.
In addition, the 58 largest asset managers in the Net Zero Asset Managers initiative (NZAM) held at least $847 billion of stocks and bonds in 201 “fossil fuel expanders” as at September 2022 according to the report.
“BlackRock is the largest GFANZ investor in fossil fuel expansion, with stock and bond holdings of $23 billion in coal developers and US$170 billion in oil and gas developers,” said the study. “Vanguard (which withdrew from NZAM in December 2022) was narrowly behind BlackRock with overall holdings of $184 billion in fossil developers.”
Amanda Starbuck, Member of the United Nations’ High-level Expert Group on the Net Zero Emissions Commitments of Non-State Entities, said in the report that it is to the credit of many of the biggest players in global private finance that they have accepted their role in addressing the climate crisis and have joined GFANZ. However, they have not taken on board the message on the incompatibility of net zero and financing fossil fuel expansion.
“The guidelines of GFANZ’s sectoral alliances, and the policies of the alliances’ financial institution members, must urgently be upgraded to push funding away from fossil fuel infrastructure and toward clean energy,” added Starbuck. “And as the UN Secretary General’s High-Level Expert Group has recommended, this redirection in finance must be rapid and deep — and done in a way that enhances equity, justice, empowers women, and respects Indigenous rights.”
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