Are you going to COP26? Many may be excused for feeling overwhelmed by the late scheduling and complex logistics that have only been made worse by the pandemic, despite wanting to be present at such a monumental gathering. This is the year of bigger, more ambitious climate commitments, we are told. But many others, or indeed all, would also be excused for feeling that by attending, they would be as much a part of the problem as the solution. Naturally, most of the travel to Glasgow, UK, where the UN’s 26th Conference of the Parties will take place this November, will be by air.
Bankers in particular may feel the twisted pressure of another, specific layer of responsibility as they are called upon to stop financing the fossil fuels on which those UK-bound planes still run. This is a genuine point as, while some are responding to this responsibility more clearly than others, there is yet no replacement for oil as of yet. Or gas, for that matter.
La Banque Postale, for example, has become the first European bank (and one of three financial institutions in the world) to centre its business strategy on scientific metrics, which the Science Based Targets Initiative, an independent body, has found compatible with the goal of keeping global warming to below two degrees Celsius.
The bank has also committed to exiting oil and gas financing by 2030 — not reducing its exposure but actually withdrawing from the sector, unless those fossil fuel companies show a satisfactory transition plan to green. No other bank seems to have made such a clear commitment, and one, furthermore, that has been scrutinised and supported by not-for-profit groups Reclaim Finance, Friends of the Earth and Oxfam. The French lender will not travel to Glasgow, CEO Philippe Heim, told me recently — more on my chat with him soon.
Other banks remain light on details on financing strategy, even when committing to carbon neutrality. Most recently, environmental groups BankTrack and the Sierra Club singled out Wells Fargo for joining the Net-Zero Banking Alliance (NZBA) without mentioning its position on fossil fuel finance. NZBA is a UN-supported industry initiative launched in April to guide lenders towards net-zero 2050 targets and set intermediate goals for 2030 or sooner. It is part of the broader Glasgow Financial Alliance for Net Zero, which will also convene in the Scottish city this November. The Sierra Club is equally unimpressed by the fossil fuel portfolios of the other US major banks part of NZBA: Citi, Bank of America, Morgan Stanley and JPMorgan.
Targets and the transition to green will continue to be the key talking points at this year’s COP26 and in all sustainability circles for some time to come. Even in jurisdictions that favour mandatory definitions, such as the EU, the path to a low-carbon economy is often confused by lack of clarity on which assets should be favoured, or permissible, to get to the end result. While the EU’s taxonomy has clearly defined what is green, conversations around transition assets have not been particularly fruitful, admits the European Commission’s director-general for climate action Mauro Petriccione, who talked to me during a recent Financial Times digital event. More needs to be done.
While some conversations are still effective on screen, it is true that there is no real replacement for being in the same room when it comes to reaching consensus on a subject of global and vital importance like climate. The same goes for reaching commitment on the financing of activities that will help the world avert catastrophe, away from those that inexorably harm it to breaking point.
As a big fear-of-missing-out sufferer, even as an observer, it pains me to consider sitting COP26 out. I’m sure I’m not alone, but instead of chasing contacts and conversations around Glasgow — commuting in from Edinburgh, as closer accommodation was already scarce and costly long ahead of the gathering — my time may be spent more wisely following discussions online and focusing on other tasks, here with the team, such as creating a new service centred on sustainable finance, that I hope we will be able to share with you soon.
Sign up here to find out more. And let me know about your COP26 experience, whether you will be there in person or not.
Silvia Pavoni is the economics editor at The Banker.
