Mark Carney is key-man risk for bank net-zero club
Private capital is needed to provide most of the $100 trillion required over the next three decades to lift clean energy investment to $4 trillion annually and limit global warming to 1.5 degrees Celsius
Mark Carney is having a deserved moment in the sun. Against many odds, the former Bank of England governor has managed to sign up all major western banks to his Glasgow Financial Alliance for Net Zero, enabling him on Wednesday to announce $130 trillion of private capital directed to meaningful decarbonisation at COP26. The fear of the more progressive members of his new club is what happens should he head off to other things, like running for Canada's premiership.
Until recently, big Wall Street players like JPMorgan and Goldman Sachs were happy to ignore GFANZ, the umbrella term for a series of net-zero alliances which also includes asset managers and insurers. Carney's credibility in both public and private sectors was integral to turning this around. It's important, too. Private capital is needed to provide most of the $100 trillion required over the next three decades to lift clean energy investment to $4 trillion annually and limit global warming to 1.5 degrees Celsius.
The catch is that the job is only half-done. Having signed up last month, JPMorgan has nearly 18 months to set its first targets for reductions in high-emissions-intensity financing. The ideal outcome would see boss Jamie Dimon commit to exit coal financing by 2030 and halve emissions by the same date. Yet GFANZ requirements only formally require members to commit to a "fair share" of this decarbonisation.
The Doomsday outcome would be if Dimon and other bank chiefs, irked by the underwhelming national emissions-cut plans emanating from COP26, pledged only a desultory 2030 reduction. Green lobbyists have already pushed for GFANZ to be more explicit on fossil fuel phase-outs and commit to the International Energy Agency's relatively hair-shirt net-zero pathway. A slew of underwhelming bank 2030 pledges would leave the alliance looking decidedly non-exclusive.
Hence, it's all the more vital Carney sticks around. That isn't guaranteed. It's not just GFANZ members who think he wants a shot at becoming Canadian prime minister. Notwithstanding the appointment of Mike Bloomberg and Mary Schapiro to beef up GFANZ governance, Carney's loss would be a big blow. After being the alliance's chief salesman, he's now its most credible bouncer.
