GFANZ was established with a dual mission to: (1) increase the number of net zero committed financial institutions; and (2) establish a forum for addressing and advancing the sector wide challenges associated with the net zero transition. It is the umbrella coalition for eight independent net zero financial alliances, each representing different segments of the financial sector.
For a successful net zero transition, it is estimated that USD275 trillion in annual capital expenditure is required by 2050. And given this immense financial need, there has been a significant surge in the activities and commitments of the GFANZ and the net zero financial alliances such as publishing a large body of different guidance materials to support transition finance. However, the net zero financial alliances have also been criticised by financial institutions, regulators and others who have questioned their legitimacy to establish rules or guidance for the financial sector.
This paper provides commentary on recent challenges faced by the Net Zero Banking Alliance (NZBA) and Net Zero Asset Managers Initiative (NZAMI) as perhaps the most prominent of the net zero financial alliances, in supporting the global net zero transition.
The commentary focusses on the challenges associated with the coordination role of NZBA and NZAMI in promoting transition finance at global level (rather than the technical content of the transition finance guidance materials or the specific challenges faced by individual banks and investors). It then articulates recommendations to address these challenges and increase the effectiveness of the NZBA and NZAMI in coordinating and advancing the efforts from banks and investors to support net zero.
About the funder:
This project was funded by the European Union LIFE program under the grant agreement LIFE18IPC/FR/000010 A.F.F.A.P.
DISCLAIMER: This work reflects the views of 2DII. The other members of the Finance ClimAct Consortium and the European Commission are not responsible for the use that could be made of the information it contains.
