Mark Carney’s Glasgow Financial Alliance in talks to review oversight by the UN climate agency

The umbrella organization of global financial institutions, co-founded by former Bank of England Governor Mark Carney, is in urgent talks to review the terms of oversight by a UN climate protection body, according to people familiar with the group.

The scramble shows the magnitude of the challenge global leaders face next week at the annual meetings of the IMF and World Bank and the upcoming UN climate summit COP27 as they try to rein in climate action amid acute energy security concerns.

Banks in the US, including JPMorgan, have proposed to withdraw from the so-called Glasgow Financial Alliance for Net Zero (GFANZ), fearing they could risk violating US antitrust laws if they deviate from the alliance when making investment decisions lead UN campaign.

The UN body called Race to Zero sets criteria to ensure corporate groups submit credible climate change goals and plans in exchange for their seal of approval.

Gfanz has previously said that compliance with the UN’s stringency is a necessary condition for sub-groups representing the banking, wealth management, insurance and pensions sectors to join and remain part of the alliance.

On Saturday, she said she had “received no indication” from its members that they were preparing to leave the group, but noted that financial institutions are independent and “managed by and subject only to their own governance structures.” “.

“Any updates on the nature of their commitments are the responsibility of the alliances, as set out in their respective governance processes,” it said.

This effectively frees some of the world’s largest financial institutions from binding UN restrictions on their investments and financing of fossil fuel assets.

In the US, Republican politicians and officials have singled out Gfanz and its members, including BlackRockwho sits on the Alliance’s steering committee, for criticizing that fiduciary duty could be hampered by concerns about green investing.

Gfanz’s re-examination of its oversight structure linked to the UN body is intended as an offer to ensure the continued support of all its members, according to those assessing the discussions.

The Race to Zero campaign previously said it could shut out financial institutions if they fail to comply with a requirement enacted in June to “restrict the development, funding and facilitation of new fossil fuel assets.”

That wording was watered down last month to drop an explicit “no new coal” policy that prevents members from funding or investing in new coal projects after some Gfanz parties sparked a backlash and legal warnings that its own employees could come into conflict with the competition law as a result of the binding language.

When the Gfanz was founded in April last year, a broad church financial climate movement crystallized under the umbrella of the Gfanz. It was worth around £130 trillion at the time of the COP26 UN climate change conference in Glasgow in November, which was intended to serve as a forum for some of the world’s largest banks, wealth managers, insurers and pension funds to coordinate efforts to reduce carbon emissions US dollar emissions.

Led jointly by Carney, now vice chairman of investment group Brookfield Asset Management, and businessman Michael Bloomberg, it has so far relied on the Race to Zero to set high-level rules for how quickly and how rigorously the transition should be made from fossil fuels and which methods to use for disclosing climate risks. Individual industry groups within Gfanz, including the Net Zero Banking Alliance, shape their policies within these parameters and are individual “partners” in the Race to Zero with their own separate relationships with the group.

Aside from the cited legal concerns, the relocations of GFANZ members are also a sign of deep-rooted disagreements among academics, civil society groups and financial institutions over whether investors should divest polluting assets and whether they should refuse to leverage new high-emission projects.

Since joining Gfanz, US banks have continued to expand financing for companies building new coal plants and infrastructure, including Japanese energy giants Mitsubishi and Marubeni Corp, according to NGO Reclaim Finance.

JPMorgan Chase is the largest financier of fossil fuel projects since the 2015 Paris Agreement, data from the RAN climate campaign Shows that renewed a total of $382 billion.

“Banks happily signed up for a big pageant at COP26 and got a lot of applause,” Justin Guay, director of climate finance strategy at campaign network Sunrise Project, told the FT. “But when they realized the world expected them to deliver on what they promised, they looked for convenient excuses to shirk that responsibility.”

Race to Zero declined to comment.