HomeBlogFinanceCOP27: UN urges Mark Carney-led climate initiative to meet higher standards

COP27: UN urges Mark Carney-led climate initiative to meet higher standards

Former central banker Mark Carney’s “net zero” coalition of more than 500 financial institutions is among the private sector climate initiatives that must maintain tighter standards, according to a UN report into corporate greenwashing.

Companies could not claim to be net zero while they continue to build or invest in new fossil fuel assets and decarbonisation plans must not support new coal, oil and gas supplies, the High-Level Expert Group said.

“Net zero is entirely incompatible with continued investment in fossil fuels,” the report concluded.

The report published at the COP27 climate summit in Egypt seeks to address greenwashing concerns by laying out a series of requirements to ensure the credibility of corporate net zero emissions claims.

It said campaigns such as Race to Zero and alliances like the Glasgow Financial Alliance for Net Zero, which is chaired by Carney, “must reinforce high-quality voluntary efforts and consolidate best practices into general norms”.

Launching the report, UN secretary-general António Guterres said “the message is clear to all those managing existing voluntary initiatives”. He added: “Abide by this standard and update your guidelines right away — and certainly no later than COP28.”

“I also have a message to fossil fuel companies and their financial enablers. So-called ‘net zero pledges’ that exclude core products and activities are poisoning our planet,” he said. “Using bogus ‘net zero’ pledges to cover up massive fossil fuel expansion is reprehensible. It is rank deception. The sham must end.”

Voluntary corporate sector climate initiatives such as Gfanz have come under criticism from pressure groups, who say their rules are too lax. Gfanz recently weakened a requirement relating to fossil fuel investments, citing antitrust issues.

Carney, a former Bank of England governor, said he welcomed the report and that Gfanz members had been “working at pace” to set emissions-reduction targets. “The world will not make enough progress without more effective government policies and meaningful reforms to the international financial architecture,” he said.

BlackRock and Vanguard, the leading asset managers and Gfanz members, recently said they would continue to invest in fossil fuels and did not believe it was necessary to end new coal, oil and gas investment.

But the UN report said that to be credible, net zero targets must cover all a company’s emissions across business and supply chains.

The expert group behind the report was led by Catherine McKenna, a former climate and environment minister of Canada.

Antonio Guterres with Catherine McKenna
UN secretary-general António Guterres with Catherine McKenna, the former climate minister of Canada who is head High-level Expert Group on net zero Commitments © AFP/Getty Images

She said companies must “meet the price of admission” to voluntary initiatives and a failure to meet the standards should result in “consequences”, which could mean “someone’s got to leave [the initiative]”.

“There are some companies, in particular financial institutions, that don’t understand that when you make a net zero commitment it means something,” McKenna told the Financial Times.

ShareAction, a charity group that promotes responsible investment, said on Tuesday that many banks that were Gfanz members had left heavy-emitting sectors, such as agriculture, out of their climate targets.

The majority had set emissions-intensity targets — a measurement based on pollution relative to economic output, which McKenna’s report said was not appropriate — and many had not included underwriting activities in their goals, ShareAction said.

The UN expert group was lukewarm on carbon credits — units companies buy to compensate for their pollution — as they could lack “integrity”, it said. Companies must not buy cheap carbon credits in place of reducing their emissions, it added.

However, interest in carbon credits as a way of raising money in return for carbon savings is building at COP27 among some parties.

The Africa Carbon Markets Initiative, which aims to scale up the production of carbon credits in the region to 300mn annually by 2030, launched its venture on Tuesday.

US climate envoy John Kerry is also working on a proposal for a power-sector credits system that is expected to be announced on Wednesday.

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