Financial community commits $130 trillion to wean global economy off fossil fuels | CBC News

But his latest task, as the United Nations’ special envoy on climate action and finance, involved some pretty daunting numbers.

Carney, who headed up the Bank of Canada and then the Bank of England between 2008 and 2020, was tasked to find more than $100 trillion in capital from the global financial community to help drive the transformation of the world’s economy from fossil fuels to a new age powered by clean energy.

“It’s a mammoth transition,” Carney told CBC News at COP26, the UN’s climate change conference, in Glasgow, Scotland. The Conference of Parties (COP) meets yearly to implement the UN’s Framework Convention on Climate Change, adopted in the early 1990s, and subsequent climate agreements.

“It’s absolutely enormous. It’s bigger than global GDP.”

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Today, on what’s been designated finance day at the Glasgow conference, Carney announced success, of sorts.

“We have banks, asset managers, pension funds, insurance companies from around the world — more than 45 countries — and their total resources, totalling $130 trillion US,” said Carney, $30 trillion more than the target.

“So one of the key messages of this COP is: the money is there.” 

Carney says more than 450 firms — including Canada’s big five chartered banks — have committed to supporting the goals of what’s become known as the Glasgow Financial Alliance for Net Zero (GFANZ).

Firms that sign onto the agreement are promising to abide by 24 financial initiatives that will signal to their customers, shareholders and investors that they are making green investments a priority.

The initiatives include climate-related reporting of their investments and transparency about climate-related financial risks.

While the agreement doesn’t compel the financial institutions to invest any specific amount of money or put it into any specific industry, Carney says it creates a new framework for them to make green investments.

“It’s about what their clients are doing, what are the emissions of their clients, the people they lend to, the people they invest in,” he said. 

However, there are notable gaps.

Big banks from some of the countries with the largest emissions — China, India and Russia — are not part of the agreement.

Nor does it compel signatories to cease funding projects such as coal mines or other ventures that contribute to greenhouse gas emissions. 

But Carney says if such investments happen they will draw both shareholder and public scrutiny. 

“What’s going to happen for RBC, JP Morgan … and investors around the world is they’re going to publish every year — ‘These are the emissions of my clients and this is my plan to get them down.’ And then people are going to be able to see whether or not they’re going to come down.”

COP26, hosted by the U.K. government, is expected to have difficulty reaching several of its stated objectives, including getting richer nations to fill up the coffers of a $100 billion fund that developing nations can tap into to help transition their economies.

At last count Tuesday, the fund was still roughly $20 billion short.

So Carney’s announcement that the financial sector will meet its target — while national governments so far have not — will be welcome news for the government of U.K. Prime Minister Boris Johnson.

In Glasgow, anticipating Carney’s announcement today, climate campaigners expressed caution about the will of the banking sector to be a force for good in climate mitigation and adaptation.

“We all need the financial system to shift — but if we start celebrating, that is going to give us the impression that we’re already there and we’re not,” said Eddie Perez of Climate Action Network Canada.

For example, he says Royal Bank claims it is a climate champion but continues to invest heavily in Canada’s oil sector.

“I think everything that gets us closer to 1.5 degrees is something that we should look up to, but we need to be much more. We have to scrutinize the strategy to see what comes out of it,” Perez said.

The goal of keeping global warming to 1.5 degrees above preindustrial levels by mid-century is seen as a crucial test for the global community. 

NDP Leader Jasmeet Singh, who’s also at COP26 this week, says there’s a risk that banks and other financial institutions will use the Carney initiative to essentially “green wash” their fossil fuel investments to make them appear more politically acceptable.

“It is actually a net impact that benefits the fight against a climate crisis? Or is this just a symbolic gesture that doesn’t actually make any concrete difference in the fight?” Singh asked.

Former Liberal environment minister Catherine McKenna praised Carney’s work, but she too stressed the need for the financial sector to increase transparency. 

“People need to know, where are they investing? Are they continuing to invest in coal?” McKenna told CBC News.

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As evidence that the agreement is already making a difference, a statement released Wednesday morning claims that 90 institutions that first signed on to GFANZ have already committed to reducing their portfolio emissions by 25-30 per cent within four years.

It also says 38 central banks in countries comprising 67 per cent of the world’s emissions have started to transform their risk-management system to better account for climate-related risk.

Carney says the agreement is the beginning of what he expects will be a long process to win over public trust that the financial sector can help bring about positive climate change.

“The only way you convince people, and the only way people should be convinced, is through a track record of emissions reduction. So it starts from here.”