Many of the world's biggest banks, asset managers, insurers, and asset owners have joined forces to form the Glasgow Financial Alliance for Net Zero (GFANZ), spearheaded by former Bank of England governor Mark Carney and US Treasury secretary Janet Yellen.
Although many financial firms have started to address the issue of climate change, the frameworks used can differ. That is why the new group will bring existing net zero initiatives together under one umbrella as it seeks to ensure all sub-sector efforts are consistent.
GFANZ will be made up of 160 of the world's biggest banks, asset managers and insurers with assets in excess of $70trn.
This is the breakthrough in mainstreaming climate finance the world needs."
"This is the breakthrough in mainstreaming climate finance the world needs," Carney said in a statement.
"Most fundamentally, GFANZ will act as the strategic forum to ensure the financial system works together to broaden, deepen, and accelerate the transition to a net zero economy."
State Street Global Advisors, the world's third-largest investment manager, on Tuesday (20 April) promised to reach net zero carbon emissions across its investment portfolios. Bank of America Merrill Lynch, Barclays, Citi, HSBC, Morgan Stanley, and NatWest are also part of the initiative.
All members will need to have their climate plans in line with the UN's Race to Zero campaign, which ensures they are science-based, cover all types of emissions, have 2030 interim targets and commit to transparent reporting and accounting. Each firm's plan is subject to peer review.
The GFANZ steering group intends to meet several times ahead of the initiative's first summit, which will take place at the COP26 Climate Summit this autumn.
Russell Investments this Wednesday (21 April) became the latest to pledge a new commitment to achieve a standard of net-zero carbon emissions for its investment portfolios globally.
"Russell Investments is focused on constructing investment portfolios that generate long-term sustainable value and climate change will likely have a material impact on investment outcomes in the coming years," said Michelle Seitz, chairman and CEO of Russell Investments.
"We don't take this pledge lightly. We will work to evolve our investment approach and take the necessary steps to achieve this net-zero goal while continuing to deliver on our fiduciary obligations to clients."
Russell Investments, which has $326.9bn in assets under management and $2.5trn in assets under advisement, wants all its portfolios to be carbon-neutral by 2050.
First published by our sister title Investment Week