COP26: The banks' path to a 1.5°C target

The long-awaited COP26 ended with the adoption of the Glasgow Climate Pact, which calls on national governments to step up their respective contributions in 2022, providing a narrow window of opportunity to limit global warming to 1.5°C. The financial sector was also in the spotlight at COP26, with three highlights:

The Glasgow Financial Alliance for Net Zero (GFANZ) released a progress report in November showing that its members (banks, insurance companies and asset managers) had committed a total of $130 trillion of private capital to align with the zero emissions target by 2030.

Members of the UN’s NZBA, which comprises 95 banks representing 43% of global banking assets, have committed to moving their lending and investment portfolios to net zero greenhouse gas emissions by 2050. Within 18 months of joining the alliance, banks will submit their first 2030 targets for high-emitting sectors.

COP26 also saw the International Financial Reporting Standards Foundation launch the International Sustainability Standards Board (ISSB). This new board will bring together the Climate Disclosure Standards Board and the Value Reporting Foundation (composed of the Integrated Reporting Framework and the Sustainability Accounting Standards Board), with the aim of creating an international standard for sustainability reporting, similar to the International Financial Reporting Standards (IFRS), which is one of the leading standards for financial reporting.

The ABBL has joined the NZBA as a supporting institution, as well as the UN Principles for Responsible Banking (PRB). We help our members understand developments in sustainable finance that impact on their business, and provide a platform to share views, advocate common positions and identify solutions and market practices. We also provide guidance on these issues, for example through a guide to implementing the Sustainable Finance Disclosure Regulation (SFDR).

By Thomas Collin