An important part of international climate policy is drafted in the boardrooms of Wall Street and the City of London. Because a global alliance of large financial groups, the Glasgow Financial Alliance for Net Zero, has taken over the agenda for the regulation of private finance within the UN climate negotiations. As a result, the financial sector is still not committed to any significant or rapid reduction in its fossil fuel financing.
The European Attac network, together with 89 civil society organizations from all over the world, criticizes this in a joint statement on the occasion of the climate summit in Sharm el-Sheikh. The organizations are demanding that governments limit the influence of the financial industry in the bodies of the UN climate negotiations. The entire financial industry must also submit to the provisions and goals of the Paris Agreement. The bare minimum are mandatory rules on exiting fossil fuel investments and deforestation.
The financial sector plays a key role in worsening the climate crisis
“By financing fossil fuel industries, the financial sector plays a central role in exacerbating the climate crisis. Despite the requirement enshrined in Article 2.1 (c) of the Paris Climate Agreement to harmonize financial flows with the reduction of greenhouse gas emissions (...), there is still no regulation that restricts or prohibits fossil investments," criticizes Hannah Bartels from Attac Austria.
The reason for this: The largest financial groups in the world have joined forces in the Glasgow Financial Alliance for Net Zero (GFANZ). This alliance also determines the UN agenda for the regulation of private finance at the current climate summit and relies on voluntary "self-regulation". This means that the very corporations that provide most of the financing for fossil fuel projects are taking over the climate agenda. Of the 60 banks that have made $4,6 trillion in fossil investments worldwide since the Paris Agreement, 40 are members of GFANZ. (1)
Profits come before climate protection
The financial groups are hardly concerned with changing their climate-damaging business models. Because their - completely voluntary - "net zero" ambitions do not provide for any real reduction in greenhouse gas emissions - as long as these can be "balanced" by dubious compensation elsewhere. "Anyone who gives priority to the profit interests of financial groups over political regulation will continue to heat up the climate crisis," criticizes Christoph Rogers of Attac Austria.
Real aid instead of loans for the Global South
GFANZ also uses its position of power to promote its preferred model of "climate finance" for the Global South. The focus is on opening up the market for private capital, granting new loans, tax breaks for corporations and strict investment protection. "Instead of climate justice, this brings above all higher profit opportunities," explains Bartels.
The 89 organizations are therefore demanding that governments come up with a serious plan for financing the transformation in the Global South that is based on real aid and not on loans. The annual $2009 billion fund that was promised in 100 but never redeemed must be redesigned and increased.
(1) The large financial groups such as Citigroup, JPMorgan Chase, Bank of America or Goldman Sachs continue to invest tens of billions of dollars a year in fossil companies such as Saudi Aramco, Abu Dhabi National Oil Co. or Qatar Energy. In 2021 alone, the total was 742 billion US dollars - more than before the Paris climate agreement.