Making finance consistent with climate goals?: taking stock of the financial sector’s climate related investment commitments

Climate change has clearly arrived on the financial world’s agenda. The number of asset owners and asset managers joining international climate initiatives is growing, and financial institutions increasingly set dedicated climate targets. Of the 50 largest asset managers and asset owners, 90% and 30% of these assets respectively are under a net zero or carbon/climate neutrality target. GFANZ, the Glasgow Financial Alliance for Net Zero was founded in 2021 as an umbrella for a number of initiatives within the broader financial landscape under the “Race to Zero” campaign. Already less than one year after its founding, GFANZ’s membership has grown rapidly to include a significant share of global assets under management but GFANZ’s direct link to the Race to Zero campaign has been severed over tensions regarding the ambition of respective membership criteria. The apparent trade-off between ambitious climate criteria and retaining broad participation is a challenge that raises questions around the potential impact of the alliance.