The world’s biggest climate coalition for financial firms is making adjustments after several high-profile banks, insurers and asset managers opted out.
The Glasgow Financial Alliance for Net Zero, which was established in 2021 and operates as an umbrella group for numerous industry-specific climate alliances, will change its relationship with those sub groups, according to a person familiar with the decision who declined to be identified.
In practice, it means companies will be able to draw on GFANZ for guidance and assistance, but won’t need to align their operations with the goals of the Paris climate agreement, the person said.
The move comes after net zero alliances lost a number of key members against a backdrop of political backlash and regulatory overlap. Goldman Sachs Group and Wells Fargo both quit the Net-Zero Banking Alliance this month.
Last year, a sub group for insurers was hit by a mass exodus amid litigation threats. And in 2022, an equivalent group for asset managers parted ways with Vanguard Group Inc., the world’s second-largest money manager.
GFANZ was formed more than 3 years ago in the run-up to the COP26 United Nations climate conference in Scotland. Back then, it had two aims: to raise the number of financial institutions committing to net zero, and to facilitate industry discussion on the challenges of the low-carbon transition.
Going forward, GFANZ will allow “any financial institution working to mobilize capital and lower the barriers to financing energy transition to participate,” according to a statement from the group.
“Without private finance, there can be no global energy transition,” GFANZ said. “For that reason, in 2025 and beyond, GFANZ will redouble its efforts to mobilize private capital.”
Under GFANZ’s new structure, companies that aren’t members of a net zero group will be free to work with the alliance, the person familiar said. The change also may make it easier for companies based in emerging economies that haven’t set 2050 net zero goals to seek some form of GFANZ affiliation.
While GFANZ has grown in prominence — it now has more than 700 members — it also has become a target of US Republicans who accuse such alliances of functioning as anti fossil-fuel cartels. Such accusations have coincided with an increase in investigations and lawsuits targeting firms perceived to be embracing a pro-climate agenda.
With President-elect Donald Trump due to return to the White House in January, the pressure on climate groups is expected to intensify.
In addition to bringing together eight sector-specific alliances spanning asset owners to venture capital, GFANZ has been a key actor in efforts to finance the early retirement of coal assets in Asia. What’s more, it’s provided guidance and insights on topics such as transition planning and portfolio alignment.
(GFANZ is co-chaired by Mark Carney, who is chair of Bloomberg Inc. and a former Bank of England governor, and Michael R. Bloomberg, the founder of Bloomberg News parent Bloomberg LP.)
