New net zero finance alliance launches to achieve net zero

Alliance members will commit to aligning all their relevant services and products to achieve net zero by 2050 or sooner, set science-based targets for emissions, and publish disclosures that are aligned with recommendations from the Taskforce on Climate-Related Financial Disclosures.

Founding members include BDO, Bloomberg LP, Campbell Lutyens, Deloitte, De Vere, EY, Grant Thornton, KPMG, London Stock Exchange Group (LSEG), Minerva Analytics, Moody’s Corporation, Morningstar, MSCI, PwC, Singapore Exchange (SGX), Solactive and S&P Global.

The UN-supported network of investors Principles of Responsible Investing (PRI) will advise the alliance and help coordinate with net zero asset owners and asset managers.

The newly launched NZFZSPA will join the Glasgow Financial Alliance for Net Zero (GFANZ) which is part of the UN Race to Zero campaign. GFANZ now includes more 250 financial firms which are responsible for over $88 trillion assets committed to align capital with net zero.

Mark Carney, the UK prime minister’s finance adviser for COP26, said the alliance will be “critical” for helping the financial sector achieve net zero.

“By joining the alliance and GFANZ, these firms are committing to ensuring their products and services support a high ambition, credible net zero transition that we need to achieve our 1.5-degree goal,” said Carney.

Although several service providers have already committed to GFANZ and aligned their investments and lending to net zero, data, products, and services of financial services will be at the forefront of creating a total net zero financial system.

According to the UN PRI, these are the “critical components” which “inform the flow of capital”.

Kunal Kapoor, CEO of Morningstar, said: “Offering transparent data, independent research, and clear ratings help investors understand sustainability and the material risks and opportunities it brings for the long term is central to empowering investors’ success and impact.”

While index providers such as MSCI and S&P Global can provide net zero aligned indices, allowing investors to anchor their investments to the net zero transition.

Henry Fernandz, chair and CEO of MSCI, said: “Reaching net zero emissions will require the largest economic transformation since the Industrial Revolution. We cannot get there without a strong commitment from financial service providers.”

Fernandz adds that the alliance will help accelerate the decarbonization of investment and loan portfolios while fuelling the innovation needed to create a more sustainable energy mix.

Unlike other global alliances, the NZFSPA is the first and only alliance that is specifically focused on service providers.

The alliance will also complement the work of global governments. Most recently the UK Treasury appointed a new group to tackle financial sector greenwashing.

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