The Glasgow Financial Alliance for Net Zero (GFANZ) today opened for consultation its draft common framework, developed for financial institutions to use in order to gauge the credibility of their net zero plans.
GFANZ members, of which there are over 500 representing more than $130 trillion in assets under management and advice, must commit to a net zero by 2050 goal, provide 2030 targets and deliver transparent reporting in line with UN criteria. GFANZ was launched at the UN Cop 26 climate summit in Glasgow in November 2021.
Net zero — or energy transition — plans from financial institutions must be in line with the Paris agreement goal of limiting global warming to 1.5°C, GFANZ said.
GFANZ lists "essential approaches" for financial institutions to support "real-economy emissions reductions", meaning emissions reduction outside the financial sector. These include financing net-zero technology to replace sources of high emissions, increasing support for companies already aligned to a 1.5°C pathway and enabling other companies to reach it, and accelerating the phase-out of high-emitting assets.
The framework concentrates on greenhouse gas (GHG) emissions that GFANZ members finance, rather than members' own operational emissions. It sets out recommendations for an implementation strategy, as well as metrics, targets and potential governance structures.
The consultation closes on 27 July and GFANZ plans to finalise the voluntary framework ahead of the UN Cop 27 climate summit in Egypt, scheduled for November. GFANZ has also published resources for companies, regulators, governments and other stakeholders to enable wider scrutiny of net zero and transition plans.
Net zero commitments and pledges are relatively new, and guidance and metrics on the subject are limited. Measurement initiatives are gathering pace rapidly, with several jurisdictions — including the US and EU — set to require climate-related disclosures this year. But most standards remain voluntary, and there is as yet no global standard in place.
