New Net Zero Financial Alliance Launched
Posted by Colin Lambert. Last updated: September 27, 2021
London Stock Exchange Group (LSEG) and Singapore Exchange (SGX) are among a host of financial infrastructure and service providers launching the Net Zero Financial Services Providers Alliance (NZFSPA).
The alliance is committed to aligning all their relevant services and products to improve consistency in financial decision-making with achieving a net zero economy by 2050, at the latest. Alliance members will set Science Based Targets for their own emissions and have committed to report on their progress, including publishing disclosures aligned with the recommendations of the Taskforce on Climate-Related Financial Disclosures. The Principles of Responsible Investing, the UN-supported network of investors, will advise the alliance and help coordinate with net zero asset owners and asset managers.
The newly launched alliance joins the Glasgow Financial Alliance for Net Zero (GFANZ), part of the UN Race to Zero campaign. GFANZ now includes well over 250 financial firms responsible for assets in excess of $88 trillion committed to align capital with net zero.
The founders say the latest launch seeks to enhance and accelerate the efforts of asset managers, banks, and other financial institutions in the Race to Zero to allocate capital in line with net zero.
To reach net zero emissions, NZFSPA says all parts of the financial system will need to align their activities with a science-based net zero transition path. Many banks, insurance companies, asset managers and owners have already committed to the goal by joining GFANZ and aligning their collective tens of trillions of dollars of investments, lending, and underwriting to net zero. “But achieving a net zero financial system will require the critical services and products that support how financial decisions get made to also be aligned with net zero,” NZFSPA says. “The data, products and services of financial service providers are among the critical components informing the flow of capital. Today’s announcement marks a significant step forward in supporting the transition of the global economy to net zero.”
All member organisations have committed to setting meaningful targets to 2025 within 12 months which are pertinent to each sub-sector. The target should reflect the way in which the action taken will help to reach the UNFCC interim target of a fair share of the 50% global reduction in carbon emissions needed by 2030, NZFSPA says, adding the targets will be reviewed and updated at least every five years with a view to increasing the proportion of services and products to achieve full alignment.
“Financial markets are central to the world achieving net zero emissions,” says David Schwimmer, CEO of LSEG. “A new financial service provider’s alliance recognises the pivotal role market infrastructure providers such as LSEG have in mobilising the trillions needed to transition to a net zero world and support the growth of new green industries.”
Loh Boon Chye, CEO of Singapore Exchange, adds, “Sustainability in Asia is steadily gaining momentum. As the world’s engine of growth, how the Asia region takes on climate action collectively could make or break success. Through GFANZ, Singapore Exchange looks forward to providing leadership and voice for Asia’s climate transition needs whilst putting into context the region’s other specific environmental and social objectives.”
The founding firms of the NZFSPA are BDO, Bloomberg, Campbell Lutyens, Deloitte, De Vere, EY, Grant Thornton, KPMG, LSEG, Minerva Analytics, Moody’s Corporation, Morningstar, MSCI, PwC, SGX, Solactive, and S&P Global. The UN Sustainable Stock Exchange initiative will play a supporting role.