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Mark Carney is the key man in banking risk for the net-zero club

Mark Carney, Governor of the Bank of England (BOE) attends a press conference at the Bank of England in London, Britain on March 11, 2020. Peter Summers / Pool via REUTERS

GLASGOW, November 3 (Reuters Breakingviews) – Mark Carney is having a well-deserved time in the sun. Against all odds, the former Governor of the Bank of England managed to enroll all the major Western banks in his Glasgow Financial Alliance for Net Zero, allowing him to announce Wednesday $ 130 trillion in private capital intended for decarbonization significant at COP26. The fear of the more progressive members of his new club is what would happen if he moved on to other things, like running for Prime Minister of Canada.

Until recently, big Wall Street players like JPMorgan (JPM.N) and Goldman Sachs (GS.N) were happy to ignore GFANZ, the umbrella term for a series of net zero alliances that also includes managers of assets and insurers. Carney’s credibility in the public and private sectors has been key to turning the tide. It is also important. Private capital is needed to provide most of the $ 100,000 billion needed over the next three decades to increase clean energy investments to $ 4 trillion per year and limit global warming to 1.5 degrees Celsius.

The catch is that the job is only half done. Having signed up last month, JPMorgan has nearly 18 months to set its first targets for reducing emissions-intensive finance. The ideal outcome would be for boss Jamie Dimon to commit to phasing out coal funding by 2030 and halving emissions by the same date. However, GFANZ’s demands only formally oblige members to commit to a “fair share” of this decarbonization.

The outcome of Doomsday would be if Dimon and other bank chiefs, upset by the disappointing national emission reduction plans emanating from COP26, only promised a rambling reduction in 2030. Green lobbyists have already pushed GFANZ to be more explicit on phasing out fossil fuels and embarking on the International Energy Agency’s relatively net zero path. A multitude of disappointing commitments from the bank in 2030 would leave the alliance decidedly non-exclusive.

Therefore, it is all the more vital that Carney sticks around. It is not guaranteed. It is not just the members of GFANZ who think he wants to have a chance to become Canadian Prime Minister. Despite the appointment of Mike Bloomberg and Mary Schapiro to strengthen the governance of GFANZ, the loss of Carney would be a blow. After being the alliance’s sales manager, he’s now its most credible bouncer.

To follow @gfhay on Twitter

NEWS CONTEXT

– More than $ 130 trillion in private capital from 450 financial groups have now pledged to establish net zero liabilities, the Glasgow Financial Alliance for Net Zero said on November 3.

– Mark Carney, UN special envoy for climate action and finance and private finance advisor to Prime Minister Boris Johnson’s COP26, said the architecture of the global financial system has been ‘transformed’ to achieve the net zero.

– “We now have the essential plumbing in place to bring climate change from the margins to the forefront of finance so that every financial decision takes climate change into account,” he said. “Only this broad goal can fund the $ 100,000 billion in investments estimated to be needed over the next three decades for a clean energy future.” “

– All GFANZ members must align with the so-called Race to Zero criteria, which means they must use science-based guidelines to achieve net zero emissions in all areas of emissions by 2050, and set intermediate objectives for 2030 which represent a fair share of the 50% decarbonisation required by the end of the decade.

– Carney also said on November 2 that there must be a process to remove members from GFANZ if necessary. He added that members should boost leadership beyond core commitments, including accelerating the phase-out of fossil fuels in line with science.

Editing by Rob Cox and Katrina Hamlin

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