Green Finance Briefing: COP27 moves the conversation from pledges to implementation
- As the COP27 climate conference unfolds, the narrative is moving from pledges towards implementation – all eyes are on the developed world to take the lead and finance the transition.
- While the financial sector took center stage at COP26, now it is being pressured to build upon the pledges made last year and start its journey to decarbonize lending and investment operations.

Today marks the end of the first week of COP27, the UN conference that welcomed global leaders in Egypt to discuss climate change in the hope of accelerating the implementation of pledges made a year ago.
While the previous edition of the conference – COP26, held in Glasgow last year – concluded with a flurry of climate pledges from nations and corporations to decarbonize and reach net zero by 2050, this year's focus is on implementation.
The finance sector was a key focus last year, with former Governor of the Bank of England Mark Carney assembling the Glasgow Financial Alliance for Net Zero (GFANZ).
Since then, the alliance has been shaky, with US banks JPMorgan Chase, Bank of America and Morgan Stanley reportedly unhappy with having to abide by criteria set by the UN’s Race to Zero campaign. GFANZ backed off and allowed members to set their own criteria, unleashing a wave of criticism towards the credibility of the whole endeavor.
And now at COP27, the initiative continues to take some heat, with its members accused of continuing to finance damaging projects despite the pledges they made.
The pressure is mounting for finance and banking to move from targets to solutions. However, this is a daunting task for most folks in this industry, and many don't know where to start. After all, not a single bank had emission-reducing targets at the beginning of 2021.
The Good Transition Plan
With this in mind, The Climate Safe Lending Network, an international multi-stakeholder collaborative dedicated to accelerating the decarbonization of the banking sector, created The Good Transition Plan Strategy Toolkit. It consists of eight modules, each with ideas and prompts for developing a credible transition plan aligned with GFANZ Recommendations and Guidance on Financial Institution Net-zero Transition Plans.
It's all about starting the strategy conversation: setting objectives, determining what the implications are and what resources are needed.
The report aims to help banking professionals ask the right questions and think about all the areas of their organization when creating a sustainability strategy. Here are some of the main takeaways:
- Redesign the pricing model to reflect climate and ESG, creating a philosophy and methodology to set baselines, as well as an incentive/penalty structure
- Product development to support transition
- Focus on solutions that overcome systemic barriers within product design
- Make sure that an appropriate ESG governance structure is in place
- Partner with fintechs that can help with data collection and quality
- Client transitions: Banks need to take into account the emissions of its full value chain, and that includes the companies it finances. This means that a bank's net zero strategy cannot exist without supporting its clients on their own decarbonization journeys.
- Invest in scalable solutions and drive endogenous growth, identifying opportunities that would compensate for the decline in business in legacy sectors
- Align climate lobbying: Advocate for policies that support or enable an accelerated and orderly transition to net zero, and do not contravene any net-zero commitments of the institution.
- Measuring climate impact in accordance with the Partnership for Carbon Accounting Financials (PCAF) reporting standards
- Redesign data systems to use client and external data in order to monitor the supply chain
- Prepare measurements separately for transactions on and off the balance sheet (portfolio) and funds, asset management, and private banking.
Quote of the week
We are now in the early stages of a sustainability revolution that has the magnitude of the industrial revolution and the speed of the digital revolution. If we invest in it and stop subsidizing the culture of death, we can save ourselves.
It is not enough to increase our support for clean energy if we are simultaneously backtracking on our commitments against developing and financing fossil fuels.
- Al Gore
Chart of the week
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