The United Nations on Wednesday called on the world’s largest economies to ensure that net zero commitments made 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 (UNEP FI) Finance Initiative has provided direct guidance to the G20 on the issue and comes days before the start of the crucial climate talks in Glasgow, Scotland.
In a report to the G20 that meets ahead of the talks, UNEP FI presented 11 recommendations for policymakers as they consider how best to monitor industry efforts to help reduce greenhouse gas emissions. by the middle of the century.
There is concern that some of the current pledges are too weak after a landmark report by a UN climate panel in August that issued a “code red for humanity,” urging countries to take faster action to reduce emissions. emissions.
“In the last two years we have seen an incredible explosion of net zero commitments,” Jesica Andrews, investment leader at UN EPFI, told Reuters.
“This is really the first time that we have conducted a state-of-the-art assessment and made really concrete recommendations on how a financial institution, specifically, sets a net zero target that is credible.”
In that context, UNEP FI said that financial institutions should align themselves with a science-based scenario or scenarios and be transparent about which ones were used.
“What’s challenging is how you define that science, and that’s what this document does; it sets out how the science should be applied to make sure the engagement is credible,” Andrews said.
“If lawmakers want to back this up and want to see more comparability, this is what we should ask financial institutions for,” he added.
Once the stage was set, companies needed to start aligning loans as soon as possible to have any hope of meeting the global goal of limiting global warming to no more than 1.5 degrees Celsius.
“This would include, for example, the immediate cessation of any new investment in fossil fuels and the rapid decommissioning of the remaining fossil fuel production, as indicated by the scenarios,” the report said.
Institutions should also ideally set five-year targets and report progress annually, applying appropriate pathways down to net zero that incentivize their underlying companies to act.
“We have a lot of goals at the portfolio level, a lot of net zero commitments at the high level, but (they) are not reducing it to the sector level, which is what will make a difference in the real economy,” he added. Andrews said.