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Ahead of the G20 Rome Summit this weekend, UN Environment Programme Finance Initiative (UNEP FI) today publishes its G20 input paper, ‘Recommendations for credible Net-Zero commitments from financial institutions’. UNEP FI is, for the first time, setting out a high-level framework for what a credible, transparent and comparable 1.5°C science-based commitment looks like and what it will mean for the real economy transition. By defining net-zero, the new guidance will help financial institutions achieve consistency in target setting and implementation of their net-zero goals.
“The purpose of these recommendations is not only to support financial institutions to credibly achieve net zero, but to catalyse change in the real economy. In the absence of a globally agreed framework, the voluntary leaders are making progress. However, we would like to see all banks, insurers and investors adopt the recommendations with support from members of the G20. The guidance, which is underpinned by the best available science, can be applied across all sectors of the global economy.”
Eric Usher, Head of UNEP FI
Financial institutions have a significant role to play on the journey to net-zero, despite being small emitters themselves. They are uniquely positioned to exert influence over real-world companies, and to monitor and finance the transition. While some financial institutions have chosen to divest from or not support high carbon sectors such as fossil fuels, this removes their ability to exert influence. Others continue to remain invested and to engage and lobby these firms around their climate plans, acting as stewards engaging the companies they own to transition to low-carbon business models. Without the milestones of a standardised and transparent framework benchmarking their progress, this can raise questions about motivations for their continuing financial relationship.
UNEP FI is calling for financial institutions to use a science-based definition of net zero – which means that all accumulated emissions over the next 30 years remain within the emissions budget required by 2050 as set out by the Intergovernmental Panel on Climate Change – and to use sector pathways to track different companies’ progress according to their industry sector. This will ultimately allow financial institutions to gain a holistic view of their alignment with a 1.5°C pathway and enable them to see whether they – and the real world companies within their portfolios – are on track to reach net-zero by 2050....
more at UNEP FI