UN urges G20 to ensure strong financial sector climate commitments | Investment News

LONDON (Reuters) – The United Nations on Wednesday called on the world’s largest economies to ensure net zero commitments by financial institutions are robust, backed by science and end funding for new fossil fuel projects.

The call is the first time that the United Nations Environment Program Finance Initiative (UNEP FI) has directly provided guidance to the G20 on the issue and comes days before the start of climate talks in Glasgow, in Scotland.

In a report for the G20 meeting ahead of the talks, UNEP FI made 11 recommendations for policymakers as they consider how best to oversee industry’s efforts to help reduce greenhouse gas emissions by mid-century.

There are fears that some of the current pledges are too weak after a landmark report by a UN climate panel in August released a ‘red code for humanity’, urging countries to act faster to reduce emissions.

“Over the past two years, we have just seen an incredible explosion of net zero commitments,” Jesica Andrews, chief investment officer at UN EPFI, told Reuters.

“This is really the first time we’ve done a cutting-edge assessment and offered really concrete recommendations on how a financial institution, in particular, sets a credible net zero goal.”

In this context, UNEP FI said that financial institutions should align themselves with one or more scientific scenarios and be transparent about which ones were used.

“What’s difficult is how you define that science, and that’s what this article does; it explains how the science needs to be applied to make sure that commitment is credible,” Andrews said.

“If policymakers want to support this and they want to see more comparability, that’s what we need to ask financial institutions to do,” she added.

Once the scenario was set, companies needed to start lining up loans as soon as possible to hopefully meet the global goal of capping global warming at no more than 1.5 degrees Celsius.

“This would include, for example, immediately halting all new fossil fuel investment and rapidly dismantling remaining fossil fuel production, as indicated by the scenarios,” the report said.

Institutions should also set, ideally, five-year goals and report progress annually, applying appropriate pathways to net zero that incentivize their underlying businesses to act.

“We have a lot of targets at the portfolio level, a lot of net-zero commitments at the high level, but (they) don’t reduce that at the sector level, which is going to make a difference in the real economy,” says Andrews.

(Reporting by Simon Jessop; Editing by Alexander Smith)

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