3 big US banks are reportedly considering leaving the climate pact | Techy Kings

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The Glasgow Financial Alliance for Net Zero (GFANZ) is reviewing the standards set by the United Nations-bound climate change organisation, Race to Zero, after several banks, including JPMorgan Chase, Bank of America and Morgan Stanley, suggested they could is leaving GFANZ, sources told Bloomberg and the Financial Times on Saturday.

GFANZ sought to dispel any rumors of unrest, issuing a statement on Saturday that it had “received no indication from any [its] member they want to leave.”

GFANZ previously said adhering to UN parameters was mandatory for the seven subgroups – representing banking, asset management, insurance, pensions and other sectors – to retain their membership.

Some banks, however, have expressed concern that they would run afoul of US antitrust laws if they followed the Race to Zero guidance on investment decisions, the Financial Times reported.

Race to Zero said it could topple financial institutions if they don’t comply with a June order to “limit the development, financing and facilitation of new fossil fuel assets.” The language, however, was softened last month to exclude explicit references to restricting funding and investment in new coal projects.

Mark Carney, co-chairman of GFANZ and a former governor of the Bank of England, publicly rebuked Race to Zero for “going too far,” according to Bloomberg.

Jakob Thomae, a member of the GFANZ advisory board, told the wire service he expects some GFANZ subgroups to cut ties with the UN campaign in favor of a more tailored decarbonization strategy.

A GFANZ spokesman said the seven sub-groups were independent organizations with their own governance structures, and they were “responsible for managing the accountability of their members.”

“Any update on the nature of their commitment is dependent on the alliance as outlined by their respective governance processes,” the GFANZ statement said.

Letting financial groups set their own terms is risky, climate sector observers say.

“Even before the revelation that some banks might leave GFANZ as opposed to real climate action, there were many doubts that the alliance could really deliver net zero,” Lucie Pinson, executive director at environmental non-profit Reclaim Finance in Paris, told Bloomberg on Saturday “The outcome of this issue will tell us firmly whether we should expect banks to lead the climate fight or act only as agents of greenwashing.”

Regardless of the rumours, the gap between a set of potentially actionable guidelines highlights the uphill battle ahead as experts prepare to convene next month for the COP27 UN climate summit — a gathering whose latest iteration was preceded by climate commitments from various financial institutions.

“Banks are delighted to sign up for the big pageant at COP26 and get a standing ovation,” Justin Guay, director of climate finance strategy at the Sunrise Project, told the Financial Times. “But when they realize the world expects them to do what they say they’re going to do, they’ve looked for easy excuses to abdicate that responsibility.”

So far, at least three large banks or asset managers that sent their CEOs to last year’s climate summit will send lower-level representatives this year, Bloomberg reported.

BlackRock CEO Larry Fink will not go to next month’s rally in Egypt, opting instead to attend a meeting of the asset manager’s board of directors, people familiar with his plans told the wire service.

BlackRock “looks forward to having a meaningful and senior presence at COP27 to engage with key stakeholders on one of the biggest themes for our clients,” he said in an emailed statement.

Likewise, Citi CEO Jane Fraser and Standard Chartered CEO Bill Winters, who each attended COP26 last year, will not attend this year, a bank spokeswoman told Bloomberg.

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