UN urges G20 to ensure financial sector climate commitments are strong
LONDON (Reuters) – The United Nations on Wednesday called on the world’s largest economies to ensure net zero commitments made by financial institutions are strong, backed by science and end funding for new fossil fuel projects.
The call is the first time the United Nations Environment Program Finance Initiative (UNEP FI) has provided direct guidance to the G20 on the issue and comes days before the start of climate talks in Glasgow, Scotland.
In a report for the G20 as it meets ahead of the talks, UNEP FI presented 11 recommendations to policymakers as they reflect on how best to oversee industry efforts to help cut emissions greenhouse gases by the middle of the century.
Some fear that some of the current commitments are too low after a landmark report by a United Nations climate panel in August that issued a “code red for humanity”, urging countries to act faster to reduce emissions.
“Over the past two years we have seen an incredible explosion of net zero commitments,” Jesica Andrews, UN investment manager at EPFI, told Reuters.
âThis is truly the first time we’ve done a state-of-the-art assessment and come up with some really concrete recommendations on how a financial institution, in particular, sets a net zero goal that is credible.
In this context, UNEP FI said financial institutions should align with one or more science scenarios and be transparent about which ones are used.
âWhat’s difficult is how you define this science, and that’s what this article does; it explains how science needs to be applied to make sure this commitment is credible, âsaid Andrews.
“If policy makers want to support this and they want to see more comparability, this is what we need to ask financial institutions to do,” she added.
Once the scenario was set, companies needed to start aligning their loans as soon as possible to have any hope of meeting the global goal of capping global warming to no more than 1.5 degrees Celsius.
“This would include, for example, the immediate cessation of all new investment in fossil fuels and the rapid decommissioning of remaining fossil fuel production, as indicated by the scenarios,” the report says.
Institutions should also ideally set five-year goals and report annually on progress, applying appropriate pathways to net zero that spur their underlying companies to act.
âWe have a lot of portfolio-level goals, a lot of high-level net zero commitments, but (they) don’t bring them down to the sector level, which is going to make a difference in the real economy,â Andrews says.
Reporting by Simon Jessop; Editing by Alexander Smith