Mark Carney is key-man risk for bank net-zero club

Mark Carney, Governor of the Bank of England (BOE) attends a news conference at Bank Of England in London, Britain March 11, 2020. Peter Summers/Pool via REUTERS

GLASGOW, Nov 3 (Reuters Breakingviews) - Mark Carney is having a deserved moment in the sun. Against many odds, the former Bank of England governor has managed to sign up all major western banks to his Glasgow Financial Alliance for Net Zero, enabling him on Wednesday to announce $130 trillion of private capital directed to meaningful decarbonisation at COP26. The fear of the more progressive members of his new club is what happens should he head off to other things, like running for Canada’s premiership.

Until recently, big Wall Street players like JPMorgan (JPM.N) and Goldman Sachs (GS.N) were happy to ignore GFANZ, the umbrella term for a series of net-zero alliances which also includes asset managers and insurers. Carney’s credibility in both public and private sectors was integral to turning this around. It’s important, too. Private capital is needed to provide most of the $100 trillion required over the next three decades to lift clean energy investment to $4 trillion annually and limit global warming to 1.5 degrees Celsius.

The catch is that the job is only half-done. Having signed up last month, JPMorgan has nearly 18 months to set its first targets for reductions in high-emissions-intensity financing. The ideal outcome would see boss Jamie Dimon commit to exit coal financing by 2030 and halve emissions by the same date. Yet GFANZ requirements only formally require members to commit to a “fair share” of this decarbonisation.

The Doomsday outcome would be if Dimon and other bank chiefs, irked by the underwhelming national emissions-cut plans emanating from COP26, pledged only a desultory 2030 reduction. Green lobbyists have already pushed for GFANZ to be more explicit on fossil fuel phase-outs and commit to the International Energy Agency’s relatively hair-shirt net-zero pathway. A slew of underwhelming bank 2030 pledges would leave the alliance looking decidedly non-exclusive.

Hence, it’s all the more vital Carney sticks around. That isn’t guaranteed. It’s not just GFANZ members who think he wants a shot at becoming Canadian prime minister. Notwithstanding the appointment of Mike Bloomberg and Mary Schapiro to beef up GFANZ governance, Carney’s loss would be a big blow. After being the alliance’s chief salesman, he’s now its most credible bouncer.

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- Over $130 trillion of private capital from 450 financial groups is now committed to set net-zero pledges, the Glasgow Financial Alliance for Net Zero said on Nov. 3.

- Mark Carney, UN Special Envoy for Climate Action and Finance and COP26 Private Finance Advisor to Prime Minister Boris Johnson said that the architecture of the global financial system had been “transformed” to deliver net zero.

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

- All GFANZ members must align with the so-called Race to Zero criteria, meaning they have to use science-based guidelines to reach net-zero emissions across all emissions scopes by 2050, and set 2030 interim targets that represent a fair share of the 50% decarbonisation required by the end of the decade.

- Carney also said on Nov. 2 that there needed to be a process for removing GFANZ members where necessary. He added members should spur leadership beyond baseline commitments, including accelerating the phase-out of fossil fuels in line with the science.

Editing by Rob Cox and Katrina Hamlin

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