Glasgow Financial Alliance for Net Zero (GFANZ)

The Glasgow Financial Alliance for Net Zero (GFANZ) is a global coalition of leading financial institutions in the UN’s Race to Zero that is committed to accelerating and mainstreaming the decarbonisation of the world economy and reaching net-zero emissions by 2050.

GFANZ was launched on the eve of U.S. President Joe Biden’s climate summit in April 2021 by Mark Carney, UN Special Envoy for Climate Action and Finance and the UK Prime Minister’s Finance Advisor for COP26, in collaboration with the UN’s Race to Zero and the COP26 Presidency.

GFANZ unites net-zero finance initiatives in the UN’s Race to Zero into one sector-wide strategic alliance. At the end of 2020, the only financial alliance in the Race to Zero was the UN-convened Net-Zero Asset Owner Alliance (NZAOA). At the start of 2021, the Net Zero Asset Managers initiative (NZAM) and the Paris Aligned Investment Initiative (PAII) were launched. This was followed by the Net-Zero Banking Alliance (NZBA) in April 2021, alongside GFANZ. This momentum has continued to accelerate, and today there are three more alliances: the Net-Zero Insurance Alliance (NZIA), the Net Zero Financial Service Providers Alliance (NZFSPA) and the Net Zero Investment Consultants Initiative (NZICI).

Why it matters

Through the Glasgow Financial Alliance for Net Zero (GFANZ), over $130 trillion of private capital is committed to transforming the economy for net zero.

GFANZ membership includes more than 450 financial firms from 45 countries, responsible for assets of over $130 trillion. It unites a significant and growing proportion of the global financial industry in a common mission to make climate considerations a part of every capital allocation decision.

It provides a vehicle for financial institutions to make similar net-zero commitments in line with the Race to Zero criteria

The Race to Zero campaign has an independent, academic-led Expert Peer Review Group (EPRG) tasked with reviewing applications to join the Race to Zero and ensuring they meet the ambitious criteria for participation. This means all GFANZ members must align with the Race to Zero criteria, which are:

• Use science-based guidelines to reach net-zero emissions across all emissions scopes by 2050.
• Set 2030 interim targets that represent a fair share of the 50% decarbonisation required by the end of the decade.
• Set and publish a net-zero transition strategy.
• Commit to transparent reporting and accounting on progress against those targets.
• Adhere to strict restrictions on use of offsets.

It provides a practitioner-led forum for financial firms to collaborate on substantive, crosscutting issues that will accelerate the alignment of financing activities with net zero and support efforts by all companies, organisations, and countries to achieve the goals of the 2015 Paris Agreement.

Main areas of work related to climate mainstreaming:

Following the launch of GFANZ in April 2021, the GFANZ Principals Group agreed on a programme of work. The workstreams are organised to drive the commitment, engagement, investment, and, ultimately, the alignment required to transition the financial system and global economy to net zero.

• Building commitment: This workstream is focused on broadening the number and nature of financial firms committed to net zero.
• Mobilising private capital to EM&DCs: This workstream will support a significant increase in the flow of private capital to emerging markets and developing countries (EM&DCs) for their transition needs through private sector investments and public-private collaboration.
• Sectoral pathways: This workstream will engage and work with industries to catalyse alignment between financial institutions and major global industries on sector-specific pathways to reach net-zero emissions.
• Real-economy transition plans: This workstream focuses on accelerating decarbonisation in the real economy by articulating financial sector expectations of transition plans from the companies GFANZ members invest in, insure, and finance.
• Financial institution transition plans: This workstream will drive upward convergence around sector-wide best practices for financial institutions to design and implement credible net-zero transition plans and tackle joint challenges in a consistent way.
• Portfolio alignment measurement: This workstream supports the further development and effective implementation of portfolio alignment metrics for financial institutions and seeks to drive convergence in the way portfolio alignment is measured and disclosed.
• GFANZ Policy Call to Action: This workstream advocates for the public policy needed to help build a net-zero economy and meet the goals of the Paris Agreement.