Despite the logistical challenges created by the pandemic, the UN climate conference in Glasgow saw an impressive turnout by banks, asset managers and insurers from across the globe.
The focus of media attention was the announcement that the Glasgow Financial Alliance for Net Zero (GFANZ), launched by Mark Carney in April, had persuaded more than 450 firms representing around $130 trillion of capital to commit to achieving net zero carbon emissions by 2050.
On the ground in Glasgow the focus had already shifted beyond the headline numbers to what comes next
On the ground in Glasgow, however, the focus had already shifted beyond the headline numbers to what comes next, and the challenges involved in turning those big numbers into real change.
Bankers and asset managers attending COP understood that making commitments for 2050 is all very well but what matters is what happens in the next decade, and indeed the next 12 months.
As one senior banker commented, on January 1 2022 no one will care about COP and the commitments that were announced there – stakeholders will want to know what institutions are doing now, today, to address the climate crisis.
Cautious optimism
Overall, the mood was one of cautious optimism. It was clear that in many areas the private sector is ahead of politicians and regulators on climate, both in understanding the risks of energy transition and in recognizing the opportunities it creates.
At the same time, bankers and asset managers were keen to stress that the private sector cannot do this alone.
Huge amounts of funding are required to help countries and companies reduce their emissions and protect themselves against the effects of climate change. The money is there, and the will to put it to work is there, but mobilizing it will require more input from policymakers.
Politicians need to provide support for areas such as green housing and clean transportation. Regulators need to create a level playing field for financial firms. And multilateral development banks need to find ways to bridge the gap between the private and public sectors.
Above all, given the global nature of financial flows, these efforts needed to be coordinated across jurisdictions.
It is reasonable to expect the financial sector to play its part in the climate fight and it is great that so many institutions are stepping up to do so. But this should not be allowed to distract from the essential role that has to be – and can only be – played by policymakers.
