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Carney Sees Watershed Moment for Climate Finance: COP26 Update

These translations are done via Google Translate
(Bloomberg) The COP26 summit turned its attention to the finance industry’s contribution to the fight against climate change, with announcements overnight revealing that banks, asset managers and insurers representing more than $130 trillion have signed up to net-zero commitments.U.K. Chancellor of the Exchequer Rishi Sunak revealed plans to make Britain “the world’s first net-zero aligned financial center,” while boosting funding for climate change.The finance day follows pledges by world leaders to protect forests and curb methane emissions to kick off the two-week summit. U.K. Prime Minister Boris Johnson urged countries for real action to match promises on fighting climate change.

Yet the bankers at COP26 have faced some push-back on their claims to be throwing the full weight of their balance sheets behind the climate fight. Given confusion around what the term “net zero” means, the Science Based Targets initiative, published a report on Wednesday aimed at providing a foundation for reaching consensus.

Key developments:

  • Carney says climate financing has reached “watershed” moment
  • Sunak plans to “rewire” the financial system
  • Yellen says climate change is an economic opportunity
  • BNP Paribas worries about greenwashing
  • Ninety One CEO warns against ditching dirty assets too quickly
  • There’s little agreement on what ‘Net Zero’ really means
COP26 Climate Change Talks - World Leader's Summit - Day One
Mark Carney during a Bloomberg Television interview at the COP26 climate talks in Glasgow, U.K., on Nov. 1

(All timestamps Glasgow, Scotland.)

India Sees Carbon Emissions Peaking in 2040-45 (11:27 a.m.)

India’s carbon dioxide emissions are seen peaking between 2040 and 2045, before sliding downward, according to India’s environment secretary Rameshwar Prasad Gupta.

G-20 Fossil-Fuel Support Was $600B in 2020: BNEF (10:59 a.m.)

Fossil-fuel support by the Group-of-20 countries in 2020 totaled nearly $600 billion, based on BloombergNEF estimates – six times the volume of climate finance due to be delivered by developing countries last year. See the full climate-policy factbook here.

EIB’s 1 Billion Euros to Help Ease S. Africa Coal Use (10.18 a.m.)

The European Investment Bank will contribute 1 billion euros to help South Africa transition away from coal, a plan that was announced on Tuesday, Vice President Ambroise Fayolle said. The U.S., U.K., Germany, France and the European Union will mobilize $8.5 billion in concessional finance and grants over the next three to five years, in an attempt to make it a template for other heavy coal-burning countries.

Logistical Challenges Persist (10:13 a.m.)

Outside the venue in Glasgow, delegates and observers arrived to long queues and an hour-long wait that many expected to be shorter with the end of the leaders summit and the departure of heads of state. “At least it’s not raining,” one observer said as he slipped into the front of a line.

The long waits and limited access — with capacity restrictions kicking in on Tuesday — have been decried by some activists and civil society organizations. They say the constraints will curb the voice of climate-vulnerable nations to shape discussions and could prevent a successful outcome.

South Africa COP26 Deal Could Be Coal-Exit Prototype (10:04 a.m.)

South Africa’s new ‘just transition’ partnership with France, Germany, the U.S., U.K. and the European Union could provide a blueprint for supporting other emerging markets that switch away from coal and other fossil fuels, provided they meet certain criteria.

Carney Describes GFANZ Financial Firepower as ‘Watershed’ (9:54 a.m.)

Mark Carney said that the $130 trillion of financial firepower behind the Glasgow Financial Alliance for Net Zero meant that there’s no shortage of private capital to tackle climate change.

“Up until today there was not enough money to finance the transition,” the former bank of England governor said on a panel. “Today is a watershed.”

What is needed now is for governments and institutions to provide net-zero aligned projects for investors to back, Carney said.

There’s skepticism though about big committments without follow-through. United Nations Secretary-General Antonio Guterres has said that there’s a “deficit of credibility” on the issue, and that he plans to establish an expert panel to measure non-state actors’ committments.

On Wednesday, GFANZ announced that Michael R. Bloomberg, the owner and founder of Bloomberg News parent Bloomberg LP, will co-chair GFANZ together with Carney.

Carbon Pricing Is Key, IIF CEO Says (9:45 a.m.)

Institute of International Finance President and CEO Tim Adams urged government leaders to do more to convince voters that a carbon pricing system is key to reaching net-zero emissions.

A carbon price “is where the public sector could lead; they’re not,” he said in a Bloomberg TV interview. The IIF is a global association for the financial industry with more than 450 members in over 70 countries.

“Voters don’t want it,” Adams said. “They fear what it will mean for home energy prices, for the price of gasoline, so what we have to do help our voters, our societies understand the need to transition to what that entails. So far we haven’t done a very good job of that.”

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Sunak Pledges to ‘Rewire’ Financial System for Net Zero (9:10 a.m.)

Sunak opened the finance day with promises to step up international climate aid, mobilize private sector finance and overhaul the global financial system to align it with a net zero future.

The chancellor told delegates at the United Nations climate talks in Glasgow that developed countries will meet their long-held pledge to mobilize $100 billion in climate finance a year, while acknowledging it’s not happening “soon enough.” Over the next five years, he said, $500 billion of financing would come in.

Sunak also pointed to a “a historic wall of capital for the net-zero transition around the world,” referring to the Glasgow Financial Alliance for Net Zero.

Earlier, he said that the U.K. has convened over 30 advanced and developing countries representing over 70% of global GDP to back the creation of new global climate reporting standards by the IFRS Foundation “to give investors the information they need to fund net zero.”

Climate Change an Economic Opportunity, Yellen Says (9 a.m.)

U.S. Treasury Secretary Janet Yellen said climate change must be confronted immediately, but that it also represents “the greatest economic opportunity of our time.”

The U.S. “intends to fully support,” along with the U.K., a financing program created by the multilateral Climate Investment Funds designed to attract private investment to projects that fight the impact of climate change in developing countries.

BNP Paribas Worried About Structured Finance Greenwashing (8:57 a.m.)

BNP Paribas SA’s Chairman Jean Lemierre said he’s concerned that banks offering structured financing including climate-related products could eventually be used to abuse carbon offsets and exacerbate greenwashing.

“That would be a big mistake of the industry, and that would be a big mistake of the world,” Lemierre said.

MSCI Says Climate Standards Needed to Stop Private Firms Hiding (8:44 a.m.)

MSCI CEO Henry Fernandez said mandatory requirements on climate issues need to be introduced across both private and public firms in order to stop companies being taken private in order to “hide” from the measures.

Fernandez, whose firm says it’s the world’s largest provider of ESG-based stock and bond issues, expects to see the biggest repricing of financial assets in history, due to climate concerns, he added in a Bloomberg Television interview.

Don’t Ditch Those Dirty Assets Too Soon, Warns Ninety One CEO (8:21 a.m.)

Ninety One Plc’s CEO has a warning for investors and politicians wanting to tackle climate change: transition gradually or it may not happen at all.

Money managers and banks representing $130 trillion in assets have now pledged to reach net-zero carbon emissions by 2050, and to provide interim goals by the end of the decade. Hendrik du Toit, who heads London and Johannesburg-listed fund manager Ninety One, said such targets would only be met if lenders and investors take a considered approach.

“If we stop all financing of what I would call dirty assets, then other forms of finance will come in, own them and not transition at all. That is the real risk,” du Toit said in a Bloomberg TV interview.

Bayer Says Monsanto Products Are Key Tools in Climate Fight (8:12 a.m.)

Bayer AG warned that an average increase in global temperatures of 1.5 degrees Celsius would wipe out as much as 10% of harvests, meaning that new farming tools will be needed to produce more food on less land.

The company is developing a new generation of cleaner crop chemicals and bio-engineered products — including a type of corn that requires less farmland — to deal with the twin challenges of a growing world population and warming planet, Matthias Berninger, head of public affairs and sustainability, said in an interview from COP26.

PKA CEO Sees a Green ‘Bubble’ (8:09 a.m.)

PKA CEO Jon Johnsen, whose pension fund oversees $55 billion, says climate change has gone from a business threat to a business opportunity, so “everybody has gone into” green finance.

The result is that “we do actually see a bubble right now,” Johnsen said in Bloomberg TV interview. “We do see that many, many investors want to move in and have their own green investments.”

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