Australian banks and insurers have signed a $174 trillion COP26 climate pledge, but critics say it doesn’t go hard enough

• A COP26 pledge to unite private finance against climate change has amassed AU$174 trillion in capital, its leaders say.
• The Glasgow Financial Alliance for Net Zero counts Australian firms like ANZ and Macquarie Group among its signatories.
• But some critics say the commitment does not go far enough to stop investment in fossil fuels.

More than AU$174 trillion in private capital has now been mobilised to achieve global net zero emissions by 2050, with a number of Australian banks, superannuation funds, and investment groups backing the major COP26 initiative.

But some climate activists have sledged the landmark financial agreement, which allows members to continue their investments in fossil fuel projects and overlook gross emission reductions.

On Wednesday morning, the Glasgow Financial Alliance for Net Zero (GFANZ) revealed that 450 firms, accounting for some 40 per cent of global assets, have now signed up to the plan.

The GFANZ is formed by six sub-alliances, which include Australian banks ANZ and Macquarie Group, superannuation giant CBUS, insurer QBE, asset consultants JANA, and the influential Investor Group on Climate Change.

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Under the GFANZ, those signatories have pledged to achieve net zero emissions across their assets and portfolios by 2050, chase a 50 per cent emission reductions this decade, and review their greenhouse gas targets every five years.

In addition, the GFANZ hopes to identify green investment opportunities, improve the measurement, reporting, and management of climate-related risks, and funnel private capital into developing economies.

The GFANZ aligns itself with the 2015 Paris Agreement, which calls on governments and private enterprises to reach net zero emissions and limit global warming to 1.5 degrees.

That noble goal is now a little more achievable, according to Mark Carney, the UN’s Special Envoy for Climate Action.

“The architecture of the global financial system has been transformed to deliver net zero,” he said.

“We now have the essential plumbing in place to move climate change from the fringes to the forefront of finance so that every financial decision takes climate change into account.

“Only this mainstream focus can finance the estimated $100 trillion of investment needed over the next three decades for a clean energy future.”

The policy roadmaps supporting GFANZ call for increased investment in “low emission fuels”, wind and solar power, and electricity storage.

Documents underpinning the coalition also ask leaders to accelerate “the phase-out of fossil fuels in line with the science.”

But the GFANZ does little to discourage members from continuing their investments in fossil fuels, offering no hard timelines for disinvestment.

Similarly, the GFANZ holds off on mandating total emission targets, instead turning to net emission reductions.

With COP26 viewed as one of the last chances to unite policy-makers and capital against the threat of climate change, critics are fearful the GFANZ measures do not go far enough.

“The financial sector talks a big game on climate, but this report reveals its flagship initiatives to be fundamentally flawed,” said Patrick McCully, senior analyst for climate advocacy group Reclaim Finance.

“Employing weak metrics, ducking the hard questions of offsets and absolute emissions, and resolutely ignoring the elephant in the room that is fossil fuels, these financial alliances are failing to address the urgency of the climate crisis.”

Although COP26’s so-called ‘Finance Day’ has drawn to a close, the conference will continue for another week, drawing out a pivotal event some pessimists have already branded a tragic missed opportunity.

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