Driving net-zero finance integrity at COP26 – Takeaways from UNEP FI’s blue zone event

11 November 2021

On the 10th of November 2021, UNEP FI co-hosted a discussion focused on the steps that financial institutions need to take to align their net-zero targets with credible 1.5-degree pathways, and on the implementation of those targets into business processes and operations.

Representatives of UNEP FI’s net-zero finance alliances, Guido Fürer – CIO of Swiss Re and member of the Net-Zero Asset Owner Steering Group, Tracey McDermott – Chair of the Net-Zero Banking Alliance and Group Head of Corporate Affairs, Brand & Marketing at Standard Chartered, and Remco Fischer – Climate Change Lead at UNEP FI – were among the speakers at the Driving Net-Zero Finance Integrity COP26 side event hosted with partners from the 2° Investing Initiative (2DII) and the Climate Policy Initiative (CPI).

The new paradigm shift, seen in the exclusive reliance on science-based target setting was emphasized by Remco Fischer, who also underlined the importance of using third-party modeling sources, such as the International Panel on Climate Change (IPCC) and the International Energy Agency (IEA). The choice of the scenario was also highlighted since focusing on no- or low-overshoot scenarios will lead to the most ambitious pathways, which is why this is what GFANZ members are asked to do.

In the context of credible 1.5-degree pathways, Fürer stressed the importance of setting ambitious and quantifiable interim targets. For Fürer and Swiss Re, when it comes to credibility and successful implementation of targets, “the first point is speed”. While the Swiss Re CIO applauded the efforts of 2DII and CPI to provide impact-tracking in the real economy, he reminded listeners that financial institutions cannot wait for perfect methodologies to start their net-zero transformation. One needs to start somewhere and Swiss Re, he said, “is learning by doing”.

The importance of simply getting started was also stressed by McDermott, Standard Chartered published in October 2021 their interim targets and methodology for pathway to net zero by 2050 in a publicly available white paper, precisely because “we know our methodology isn’t perfect”. But Standard Chartered also recognizes that “there is value in transparency, and we can share the learning.” McDermott also pointed out that the ability to exchange knowledge with like-minded institutions is one of the benefits of joining a net-zero alliance. The similar sentiment was expressed by Fürer, who said that “Swiss Re always tries to act as a role model in our industry. But we are also stronger when we are surrounded by similar minded peers.”

Acting as an industry role-model was underscored as crucial by all the speakers, as this position provides an opportunity for financial actors to be enablers of change in the real economy, both by engaging with their clients and meeting their targets, and by acting as an inspiration for other financial institutions, which in turn come to see the net-zero transformation as possible.

A replay of this event is now available online:

 

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