(Bloomberg) — AllianceBernstein Holding LP is among major investment firms adding its name to the world’s largest climate finance coalition, as the COP27 summit in Egypt turns its attention to the role played by banks and asset managers in steering capital toward a lower-carbon future.
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Northern Trust and Capital Group Inc. also joined the Net Zero Asset Managers initiative, a sub-unit of the Glasgow Financial Alliance for Net Zero, according to a statement on Wednesday. The news was timed to coincide with COP27 Finance Day, which will be a leaner affair than in Scotland last year after a number of prominent chief executives including BlackRock Inc.’s Larry Fink and Citigroup Inc.’s Jane Fraser opted to stay away.
An energy crisis and a changing political landscape in the US are making it harder for banks and investors to turn their backs on fossil fuels. Financial firms are also increasingly nervous of the legal ramifications of joining net-zero alliances, with some in the US claiming that such goals are at odds with fiduciary duties. And in some cases, climate-finance alliances have even been likened to cartels.
Read More: Blackstone, Pimco Sidestep Net-Zero Group Even After Concessions
Those legal risks may intensify, depending on the outcome of midterm elections in the US. Republican warnings that corporate ESG efforts could violate the nation’s antitrust laws are already prompting some companies to slow down their climate efforts.
But there’s also a legal risk involved in making climate promises that firms don’t live up to.
“These may be voluntary commitments, but they are commitments nevertheless,” said Sonali Siriwardena, partner and global head of ESG at Simmons & Simmons in London. “So firms should be wary of being caught in the riptide of unrealistic ambitions as it may expose them to both litigation and reputational risks if they don’t meet these commitments.”
Meanwhile, there are more organizations policing climate promises. A UN-appointed group has defined a series of tests that determine whether net-zero pledges are genuine or “dishonest.” The expert group, which was appointed by UN Secretary General Antonio Guterres and is chaired by Canada’s former environment minister Catherine McKenna, lays out recommendations “to prevent net zero from being undermined by false claims, ambiguity and ‘greenwash.’”
In an effort to accommodate finance industry concerns, GFANZ recently allowed members to ignore a UN-backed group, Race to Zero, which had proposed binding restrictions on fossil finance. It also reassured signatories that GFANZ sub-alliances are “only subject to their own governance structures.”
(GFANZ is co-chaired by former Bank of England Governor Mark Carney and Michael R. Bloomberg, the founder of Bloomberg News parent Bloomberg LP.)
Read More: 10 things to watch at the COP27 summit
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Click here to get read about Bloomberg Green at COP27
Here are the latest developments. All times Egypt.
Carney Says Regulations Key to Unlocking Climate Finance (9:27 am)
The trillions of dollars needed for the global energy transition “won’t come from governments,” said Mark Carney, the co-chair of the Glasgow Financial Alliance for Net Zero.
Yet governments will play a key role in “unlocking” those funds, he said. Policy makers should “align financial regulation with net zero” by making net zero Transition Plans mandatory, by “pricing the externalities of carbon” and “mobilizing capital to the emerging and developing world by ensuring that official finance crowds in private sector, private finance at scale,” Carney said.
“The necessary private finance will be there to fulfill the commitments of government to address climate change, if they wish,” he said.
Africa Recognizes Need to Pursue Green Growth (8:43 am)
Africa’s common position at the COP27 summit recognizes the need for growth alongside the duty to provide electricity to its 600 million inhabitants who don’t have access to energy, UN Economic Commission for Africa acting Executive Secretary Antonio Pedro said. That energy shortfall is the reason the continent is promoting natural gas as a “transition fuel,” Pedro said in an interview with Bloomberg Television.
While seeking so-called loss and damage — compensation by rich countries for damages suffered by developing countries because of global warming — Africa is also promoting investment in renewable energy, Pedro said. He cited as an example the Great Blue Wall Initiative, which aims to protect 2 million square kilometers of protected and conserved areas along East Africa’s coast.
Affordable Debt Would Be a COP27 Success, Egypt’s Maait Says (8:38 am)
A world hit with inflation, rising debts and growing climate impacts needs development banks to step up, said Mohamed Maait, Egypt’s finance minister. “More financing at a reasonable cost and on reasonable terms,” Maait said would count as a success at COP27.
Egypt and Norway to Build 100MW Green Hydrogen Plant on Red Sea (8:12 am)
Egypt and Norway’s Scatec have signed an agreement on the sidelines of the climate talks in Sharm El-Sheikh to start the first phase of a project to build a green hydrogen plant on the red sea. Plant in Egypt will have a 100-megawatt capacity.
Net-Zero Asset Managers Group Says Alliance Has Grown to 291 (8:00 am)
The Net Zero Asset Managers initiative says 86 investors have set initial targets for the proportion of assets that will be managed in line with achieving net zero emissions by 2050 or sooner, with the total number of asset managers committing to net zero rising to 291.
That brings to 169 the total number of managers with such targets, collectively representing over $55 trillion in assets under management, according to a statement by NZAMi on Wednesday. New signatories include Capital Group, Northern Trust and AllianceBernstein.
Zimbabwe Signs Accord With SkyPower on 500MW Solar Plant (7:47 am)
Zimbabwe has signed an agreement with SkyPower Global to build a 500-megawatt solar-power plant, United Nations Economic Commission for Africa acting Executive Secretary Antonio Pedro said in an interview.
The accord was signed at the COP27 summit taking place in Sharm el-Sheikh, he said, without providing details.
World’s CO₂ Hotspots Pinpointed by Al Gore-Backed Project (7:00 am)
A consortium of dozens of research nonprofits on Wednesday launched a free online platform that details greenhouse gas emissions around the world across 20 economic sectors.
Climate Trace, which can be viewed on a web browser, includes a zoomable world map that displays and ranks the dirtiest 72,000 power plants, oil refineries, airports, ships and more. The group used satellite imagery and machine learning as well as more conventional techniques to build what it says is the largest available source of greenhouse gas emissions data.
Climate Change Could Cost Africa Two Thirds of Its GDP Growth (2:01 am)
Global warming could slash Africa’s economic growth by two thirds by the end of the century unless significant investment is made in climate adaptation, a new study shows.
Current climate policies will likely see temperatures exceed the pre-industrial average by 2.7C, curbing African growth rates 20% by 2050 and 64% by 2100, Christian Aid said in a report released Wednesday. Even a 1.5C rise in temperatures would reduce growth rates by 34% by the century’s end, it said.
While Africa is responsible for about 4% of planet-warming emissions, it’s already being hit hard by a changing climate. Devastating cyclones and floods have battered southeast and West Africa this year while the Horn of Africa is in the midst of its worst drought in four decades.
–With assistance from Salma El Wardany, Yousef Gamal El-Din, Paul Richardson, Mirette Magdy, Akshat Rathi and Siobhan Wagner.
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