Page 24 - REM Annual Review 2021

REM NOVEMBER REM

World commits to $100bn of

climate finance for global south

GLOBAL UK Chancellor Rishi Sunak said at COP26 Plan Taskforce, composed of industry and aca-
that the world’s rich nations would make good demic leaders, regulators and civil society groups
on their promise of $100bn per year of climate Sunak proposed a mandatory requirement
financing for poor countries by 2023. for financial institutions and listed companies
He also revealed ambitious plans to create to report on net-zero transition plans. This plan
a Net Zero Finance Centre that aims to unlock will be rolled out on a similar timeline to the UK’s
$130 trillion of private financing to create more existing Sustainability Disclosure Requirements,
momentum towards net zero. with firms expected to start disclosing their net
The UK’s radical new proposal for a new zero transition plans in 2023.
oversight system to keep energy investment
green aims to align public finance with the reg- $100bn target
ulatory and fiscal tools needed to, in Sunak’s On a global scale, the $130 trillion of private
words, “rewire the global financial system,” and finance comes from over 450 firms from all parts
to bring the global economy into line with gov- of the financial industry, based in 45 countries,
ernments’ net-zero ambitions. although no timescale was given.
The UK-focused centre will make it man- The initiative aims to enable the private sector
datory for UK financiers and investors, such as to provide money needed to reach net zero. The
private equity firms, insurance company and private sector could deliver 70% of total invest-
portfolio investors, to publish a clear, deliverable ments needed to meet net-zero goals, according
plan setting out how they will decarbonise and to research from the UN High Level Climate
transition to Net Zero – with an independent Action Champions.
Taskforce to define what is required. The investment involves banks, insurers,
Sunak’s said his plans would help implement pension funds, asset managers, export credit
the global Glasgow Financial Alliance for Net agencies, stock exchanges, credit rating agencies,
Zero (GFANZ), announced at COP26 by for- index providers and audit firms. They have all
mer Bank of England chief Mark Carney, which committed to achieving net-zero emissions by
has aligned over $130 trillion in private finance 2050 at the latest and enabling a 50% emission
behind net zero. reduction by 2030.
This commits around 40% of the world’s The funding will be accompanied by the
financial assets to reaching the Paris Agreement establishment by the IFRS Foundation, the
and to limiting global warming to 1.5C. international accounting standard body, of a new
International Sustainability Standards Board to
Greenwashing develop globally consistent climate and broader
Raising such huge funds will require care regu- sustainability disclosure standards for the finan-
latory retimes in order to prevent greenwashing, cial markets.
whereby private finance earmarked for net zero “The rapid, and large-scale, increase in cap-
in fact turns out to be less green than promised. ital commitment to net zero, through GFANZ,
Sunak’s new measures mean that the UK will makes the transition to a 1.5°C world possi-
lead the world in rewiring its financial system ble. To seize this opportunity, companies must
and implementing a range of new measures. deliver robust transition plans and governments
These include: better and more consistent cli- set predictable and credible policies. This will
mate data; sovereign green bonds; mandatory give finance the confidence to invest, pulling
sustainability disclosures; proper climate risk forward climate actions and smoothing the
surveillance and stronger global reporting transition to net zero, driving growth and jobs
standards. upwards, and forcing emissions downwards.
A science-based “gold standard” for transi- Let’s work together to seize this opportunity,”
tion plans, which can be followed by other coun- said Carney.™
tries as well, will be drawn up by a new Transition

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