The Bank of England has launched a “COP26 Private Finance Agenda” to help private finance support the global economy transition to net zero greenhouse gas emissions. The objective is that every professional financial decision will need to take climate change into account. The right framework for reporting, risk management and returns will embed these considerations and help finance a whole economy transition. To achieve net zero, every company, bank, insurer and investor will need to adjust their business models for a low carbon world.
“2020 must be a year of climate action, making COP 26 – co-hosted by the UK and Italy – a critical opportunity to help put emissions on a trajectory towards a net zero economy, consistent with the Paris Agreement,” reads a statement published by the Bank of England.
“Recognising that net zero is both an imperative of climate physics and, in the UK and 120 other countries, the law of the land, financial markets are increasingly demanding clear disclosure and active management of climate opportunities and risks. Private finance is uniquely placed to help support the transition required by amplifing changes in attitudes, consumer preferences and climate policy. Markets can pull forward adjustments from the future, minimising costs and smoothing the adaptation.”
Mark Carney, Governor of the Bank of England and United Nations Special Envoy for Climate Action and Finance said: “Given the scale of the climate challenge and the rising expectations of our citizens, 2020 must be a year of climate action where everybody’s in, and that includes the world’s leading financial centre. To identify the largest opportunities and to manage the associated risks, disclosures of climate risk must become comprehensive, climate risk management must be transformed, and investing for a net-zero world must go mainstream.”
Speaking at the launch event, COP26 President-designate and Secretary of State for Business, Energy and Industrial Strategy, Alok Sharma said: “This is a pivotal year for the planet as we raise our ambition on emissions reductions and build an economy resilient to climate change. But this is not just about the work of individual governments. We are calling on action from everyone – businesses, civil society and each part of the global financial system to meet the Paris Agreement goals. COP26 is also a critical moment to enhance support for developing countries. We are determined to work together to deliver a prosperous, zero carbon future for all.”
Also speaking at the event, Deputy Executive Secretary of UN Climate Change Ovais Sarmad said: “For COP26, it is extremely important to rebuild trust among the parties, especially in relation to the provision of financial support to the developing countries. This event today hosted by the COP26 President, Governor Carney and multilateral banks is encouraging. And it is particularly meaningful and encouraging to witness many finance leaders acknowledging the reality of climate change, taking concrete action and willing to lead the way towards rebuilding that trust through innovative and concrete finance solutions for climate action in all sectors of business.”
The launch event was hosted by the Lord Mayor of London at Guildhall and began with Sir David Attenborough setting out the scale of the climate challenge. During the morning, leaders from the private finance sector and related fields discussed the actions they were already taking to realise the opportunities and manage climate risks, and how to accelerate action for COP 26.
Welcoming attendees to the event, Rt Hon. Lord Mayor of London, Alderman William Russell, said: “The City, London and UK are already leading the charge to a sustainable financial future, but there is lots of work still to be done. With finance at the heart of this agenda, it gives us the mandate to deliver the monumental reallocation of capital needed for our transition to net zero.”