3 min read. In connection with its latest annual status report, the TCFD today published an update to its2017 implementation guidance, which now includes a recommendation that investors and lenders disclose the alignment of their activities with a well-below 2C global warming scenario. Implied Temperature Rise from MSCI ESG Research is an intuitive, forward-looking metric, expressed in degrees Celsius, designed to show the temperature alignment of companies, portfolios and funds with global temperature goals. Wie hat sich unsere Natural Capital"-Strategie inmitten der Paradigmenwechsel im Finanzwesen und in der Wirtschaft, die sich seit Lancierung der Strategie vor zwei Jahren vollzogen haben, bewhrt, und welche naturvertrglichen" politischen Massnahmen haben das Thema gestrkt? Measuring Portfolio Alignment: Enhancement, Convergence, and Adoption aims to offer guidance on multiple technical aspects, structured around 9 'key judgments'. SME News Service. It continues to encourage Scope 3 emission disclosures, but says this is subject to a materiality assessment. Though this may be a tough process for some institutions, it promises to be worthwhile both for them and the wider net-zero financial system. This report brings much-needed consistency on metrics and data points required by global financial institutions to evaluate the progress and credibility of companies net-zero transition plans. A group of experts established by Mark Carney, in his capacity as UN special envoy for climate and finance, has finalised best practice guidance on portfolio alignment metrics to support a new recommendation for investors from the Task Force on Climate-related Financial Disclosures (TCFD). Manifest Climate Inc. 160 Bloor Street East, Suite 1010 Toronto, ON M4W 1B9, Manifest Climate Inc. - New York 127 W 30th Street, 9th Floor New York, NY 10001, hello@manifestclimate.com +1 (877) 762 6433, GFANZ Wants to Whip Portfolio Alignment Metrics into Shape, Want climate insights delivered right to your inbox? GFANZ launched in April last year in a drive to unite the global financial sector in transitioning to net-zero portfolios by 2050. The draft Glasgow Financial Alliance for Net Zero (GFANZ) Portfolio Alignment Measurement report is out. The draft Glasgow Financial Alliance for Net Zero (GFANZ) Portfolio Alignment Measurement report is out. GFANZ said the report includes "new and improved guidance to measure the alignment of financial institutions' investing, lending and underwriting activities towards net-zero commitments." It added that it was gathering feedback on proposed improvements to measure whether investment portfolios are targeting net zero. accounting, financial or other advice, has been provided by GFANZ and has not been independently verified by any person. GFANZ provides the tools and resources the financial sector needs to implement its net-zero commitments. 2022 CONCEPT NOTE ON PORTFOLIO ALIGNMENT MEASUREMENT 2 Acknowledgements This report was developed by the GFANZ workstream on Portfolio Alignment Measurement with input from the GFANZ Principals Group, Steering Group, and Advisory Panel. Press Release. One year ago at COP26 in Glasgow, ex-governor of the Bank of England Mark Carney announced that more than $130trn (109.54trn) of private capital had been committed to net zero under his landmark initiative, the Glasgow Financial Alliance for Net Zero ().This was a strong sign that financial institutions were ready to take responsibility for their impact on climate change, and GFANZ has only . Achieving the objective of the Paris Agreement to limit global temperature increases to 1.5C from pre-industrial levels requires a whole economy transition. On the contrary, the report explains that many firms do not want to limit themselves to a single metric, but prefer instead a dashboard approach which makes use of a variety of backward- and forward-looking metrics. In fact, in adraft versionof its 2021 implementation guidance, the group recommended that financial institutions measure and disclose the alignment of their portfolios consistent with a 2C or lower temperature pathway, a task arguably best suited for ITR-style PAMs. commit to forcing portfolio companies to "align[] political lobbying with the Paris Agreement," without . The problem is that the evolution of these tools has outpaced efforts to organize, standardize, and validate them. GFANZ is working to change this. In this instance, GFANZ is reflecting the will of its signatories. Its a long list of questions, and there are multiple credible responses for each one. But firms seem to be moving in this direction anyway, given their professed preference for climate dashboards that include multiple PAMs and backward-looking metrics. GFANZ proudly announced its members were already aligning their portfolios with 1.5C; 90 of its founding institutions had already set short-term climate targets, including 29 asset owners committed to reducing portfolio emissions by 25-30% by 2025. 2022 Glasgow Financial Alliance for Net Zero. Download the report (updated as of 9 November 2022). Login Username (email address) Password Green Finance Briefing: GFANZ moves a step ahead on net zero portfolio alignment Financial services need to decarbonize, but the banks and FIs looking to start this journey or deliver on their net-zero commitments are looking at a tricky road ahead. Should you use absolute emissions or intensity? This may result in more lengthy disclosures. More than 30 million individual investors around the world have chosen to entrust Vanguard with their hard-earned savings. Sign up to receive our newsletter and stay updated on the latest GFANZ news and events. When you consider the disclosure around transition plans, a lot of that will capture Scope 3 emissions as well, so we think were narrowing the universe of companies that wont also be disclosing Scope 3, MarySchapiro, head of the TCFD and vice chair for global public policy at Bloomberg L.P., told journalists yesterday. or implied in the Note is intended to create legal relations and the Note does not create legally enforceable obligations. For its part, the TCFD today also released new guidance for companies to disclose their plans for a net-zero transition in line with the Paris Agreement, including disclosure of seven categories of cross-industry metrics like Scope 1, 2 and 3 greenhouse gas (GHG) emissions. Asset managers need to figure out how to align membership of GFANZ with their fiduciary duty to clients, and fast. Pascal Christory, group CIO at AXA Group, said the metric enabled it to identify transition models and their impact on climate change, but that the ITR metric needed methodological convergence. It provides useful technical hints to help asset owners think how to measure investment-related climate neutrality, and will reduce the risks of greenwashing associated with loosely defined ITR models.. . Welcome to IPE. David Blood, head of the portfolio alignment team at the COP26 private finance hub and co-founder of Generation Investment Management argues that portfolio alignment metrics will be a crucial catalyst of the transition to net zero. Portfolio alignment tools have an important role to play in the target-setting process, in that they can provide input on what needs to be done in order to align a portfolio with the goals of the Paris Agreement in the intermediate term (e.g., on the way to net-zero), given its unique economic composition. . Hundreds of science-based interim targets have been published by firms. Glasgow Financial Alliance for Net Zero (GFANZ) | 3,586 followers on LinkedIn. This webinar will discuss the August GFANZ Portfolio Alignment report, which provides a practitioner perspective for measuring the alignment of investment, lending, and underwriting activities with the goals of the Paris Agreement and critical 2050 global net-zero objectives. Still, financial institutions want to plot a course to its coolest fringes. As a result, there now exists an exotic menagerie of PAMs addressing various use cases and built using all kinds of forward-looking methodologies. Flawed PAMs may lead financial institutions to inadvertently increase their exposure to climate transition risk, for example by investing in carbon-intensive companies that arent taking appropriate steps to lower their emissions. Thanks to all 50+ organizations who engaged with us to get the report to this stage, as well as the technical leadership of Anja Ludzuweit, CFA, and with the support of Edward Mason and David Blood. Author: Portfolio Alignment Team Industry Group: Financial. Portfolio > Asset Managers. crosscutting issues that will accelerate the alignment of financing activities with . Hence the buzz over portfolio alignment metrics (PAMs) the measurement systems firms can use to understand what investment, lending, and underwriting activities support a 1.5C warming pathway. Advisory Panel of 20 independent experts from around the world, and the 7 NGOs that convene the sub-sector alliances of GFANZ. Background on GFANZ and the Report. investment advice or recommendation of any securities or financial instruments. Welcoming the TCFD publications today, the Financial Stability Board said the framework had become a widely supported basis for climate-related reporting, most recently through jurisdictional initaitives to make such disclosures mandatory or promote voluntary implementation, as well as through the IFRS Foundations work to develop a baseline global sustainability reporting standard. Following the public comment period, GFANZ will release a final report prior to COP27 in Egypt. Alienate them by imposing unwanted standards and the alliance could break apart. One key GFANZ workstream is portfolio alignment measurement. Mary Schapiro, Vice Chair of GFANZ, said Growing global scrutiny of transition plans makes the need for business action on climate ever more urgent, If financial institutions are to deploy the capital required to usher in the net-zero transition, they need a way to measure whether their financing activities align to their ambition.. This site uses cookies. Covering the financial gamut, GFANZ has seven sector-specific alliances to "drive progress at the grassroots level to raise the ambition on net-zero commitments, increase engagement, and support their members' acceleration of their alignment journeys." Each alliance operates under the same goalnet zero emissions by 2050 or sooner. How should alignment be expressed as a metric? These publications aim to support financial institutions in developing and implementing credible, high-ambition strategies for achieving net zero. Investors can use Implied Temperature Rise to set decarbonization targets and support engagement on climate risk. Published on: 12 Aug, 2022, 3:56 am. ITRs are a relatively new tool and have been the subject of heated debate, although they are being used by organisations such as AXA and Japans Government Pension Investment Fund. Thanks to all 50+ organizations who engaged with James Davis auf LinkedIn: GFANZ-Portfolio-Alignment-Measurement-August2022.pdf The information in this Note, which does not purport to be comprehensive, nor render any form of legal, tax, investment. Firms could also disclose their portfolio alignment under old and new iterations of their chosen PAMs side-by-side to head off accusations of greenwashing. 2 min read. GFANZs practitioner-led guidance has been developed based on input from net-zero stakeholders, including financial institutions, financial data providers, and civil society. The guidance itself is organized around a conceptual framework established by thePortfolio Alignment Team, a group of climate finance professionals who published reports on designing effective PAMs in 2020 and 2021. In light of GFANZ's recent decision to downgrade its ties with the UN Race To Zero Campaign, it is positive to see co-chairs Michael Bloomberg and Mark Carney, and vice-chair Mary Schapiro, stressing the need to halve CO2 emissions by 2030 in the foreword to their detailed report giving guidance on financial institution net-zero transition plans. That is why we support the TCFD-commissioned work on portfolio alignment tools, presented in the PATs report published today, he said. Our climate future is unknown territory. Certain metrics are, after all, more difficult to put together than others. A fund that has been using a PAM that only considers Scope 1 and 2 emissions for these sectors may today be able to show that its portfolio is aligned with a 1.5C pathway. GFANZ calls for portfolio alignment feedback To access this article please sign-in below or register for a free one-month trial. GFANZ members have signed up to the ambitious commitments of their respective sector-specific alliances and are not, automatically expected to adopt the principles and frameworks communicated within this report, although we expect all. There is currently a proliferation of PAMs being used, which impedes on the financial sector's ability to accurately assess the progress and risk of their portfolios in the context . It could also have significant business implications. Read our policy. The guidance itself is organized around a conceptual framework established by the Portfolio Alignment Team, a group of climate finance professionals who published reports on designing effective PAMs in 2020 and 2021. GFANZ will be at COP15, the 2022 UN Biodiversity Conference taking place in Montreal, Canada. This coalition now includes over 550 financial institutions committed to the goal of net zero greenhouse gas (GHG) emissions by 2050, in support . GFANZ's proposed framework consists of three "conceptual steps": translating net zero-aligned and scenario-based carbon budgets into benchmarks, assessing company-level alignment against such benchmarks based on cumulative emissions, and aggregating company-level alignment at the portfolio level. GFANZ does not make the same mistake as the TCFD by declaring a preference for one PAM over another. The report aims to drive adoption of portfolio alignment metrics and meaningful convergence . For example, GFANZ recommends in respect to judgment 4 what scope of emissions should be included? that Scope 3 emissions be factored into company-level alignment for certain priority sectors, including oil and gas and electric utilities. On August 2022, GFANZ issued a guidance document for consultation with the aim to enhance, converge, and adopt international best practices for portfolio alignment metrics (PAMs). The chairs were referencing a June update from Race to Zero, an influential coalition promoting net zero and . The Alliance accounts for 40% of the world's total financial assets, up from $90trn at the start of October. Review the list of activities GFANZ will be participating in at COP15 with the latest announcements, speeches, and events as they happen. Certain stakeholders pushed back against this in a subsequent consultation. 2022 CONCEPT NOTE ON PORTFOLIO ALIGNMENT MEASUREMENT, This report was developed by the GFANZ workstream on Portfolio Alignment Measurement with input, from the GFANZ Principals Group, Steering Group, and Advisory Panel. This framework consists of nine key design judgments specific questions that financial institutions and metric providers should consider when building PAMs and best practice recommendations for answering each one. GFANZ 2022 Progress Report. Nothing in this Note constitutes an offer or a solicitation of an offer to buy or sell any securities or financial instruments or. Mark Carney delivers the opening keynote at COP27 Finance Day, discussing how private sector finance will be essential to deliver the trillions of dollars needed to limit global warming to 1.5 degrees. The TCFD is now saying that absolute Scope 1 and 2 GHG emissions should be disclosed regardless of materiality. The simplest such metric for this purpose may befinanced emissions, presented according to the Partnership for Carbon Accounting Financials methodology. Instead, it states that asset managers and asset owners should use whichever approach or metrics best suit their organisational context or capabilities. Gfanz responded by weakening its alignment with UN climate goals that called for members to roughly halve the emissions they are responsible for by 2030. GFANZ makes a start on this task by sorting PAMs into four categories: The variety of PAMs in circulation reflects the range of use cases they serve, as well as the dispersion of technical skills and climate data availability across institutions. An update on Vanguard's engagement with the Net Zero Asset Managers initiative (NZAM) December 07, 2022. The 2021 PAT report identified three key categories of portfolio alignment metrics tools to support financial institutions' efforts: Binary target measurements measure the alignment of a portfolio with a given climate outcome based on the percentage of investments or counterparties in a portfolio with net-zero, Paris-aligned targets. officers, employees, agents or advisers in relation to the adequacy, accuracy, completeness or reasonableness of this Note, or of any other information (whether written or oral), notice or document supplied or otherwise made available to any. The guidance featured in the report, therefore, is intended to apply to the whole spectrum of PAMs. This is especially important for those firms in the Glasgow Financial Alliance for Net Zero (GFANZ), the umbrella group of climate finance initiatives dedicated to decarbonizing the economy in line with the aims of the Paris Agreement. How do you aggregate counterparty-level metrics into a portfolio-level score. An Advisory Panel of NGOs and technical organizations ensures that GFANZs work is held to the highest standards of ambition while keeping climate science at the heart of everything GFANZ does. GFANZ has marked a path to improving PAMs that may require some financial institutions and metrics vendors to go back to the drawing board when it comes to their own portfolio tooling. GFANZ issues draft statement on the Country Platforms model for increasing capital for emerging markets and developing economies (EM&DEs). How should benchmark scenarios be selected? The RTZ announced an update to its membership criteria.The RTZ is a coalition of over 10,000 businesses, financial institutions, and government bodies worldwide that was . This report details the progress GFANZ has made in 2022 under our program of work to support financial institutions in operationalizing their net-zero commitments, accelerate capital mobilization to EM&DEs, and advocate for credible policies and standards to enable net-zero transition across the globe. "Portfolio alignment metrics are a really significant tool for investors as they pursue their net-zero goals." (GFANZ), a Carney-led coalition, "as the natural place to take guidance on portfolio alignment metrics . Building upon the implementation of sound financial sector and real-economy transition plans as well as science-based net-zero pathways, GFANZ's Portfolio Alignment Measurement Report will help financial institutions use metrics to assess whether their portfolio companies are 1.5 degrees C-aligned or need resources to transition." The alliances goal is to bring about convergence on best practice, improve the transparency on the assumptions that underpin PAMs, and broker agreement on their methodological frameworks. . Source: GFANZ . 43 banks from 23 countries (with assets of US$28.5 trillion) form the Net-Zero Banking Alliance (NZBA) today - which joins GFANZ - with its members committing to align operational and attributable emissions from their portfolios with pathways to net-zero by 2050 or sooner. The report aims to drive adoption of portfolio alignment metrics and meaningful convergence . The Glasgow Financial Alliance for Net Zero (GFANZ), proposed new and enhanced guidance on measuring the alignment of financial institutions' investment, lending, and underwriting . Doing so would provider stakeholders with a fallback disclosure they can use to anchor their understanding of the forward-looking PAMs. . "To measure portfolio alignment, financial practitioners should consider nine key decisions, the key design judgements," said Anja Ludzuweit, executive director of portfolio alignment measurement for GFANZ. As a result, this guidance enables financial institutions to better measure how aligned a portfolio or lending book is with net-zero objectives. However, promoting the whole gamut of PAMs may not best serve the overarching mission of the alliance. | The Glasgow Financial Alliance for Net Zero (GFANZ) is a practitioner-led, global coalition of financial sector institutions and their sector-specific alliances. Sign up to receive free and essential industry news and updates, delivered direct to your inbox, 2022 Climate Action. After all, a single type of PAM used industry-wide would make it easier to assess the financial systems overall alignment with net-zero goals. Today GFANZ includes over 450 financial institutions representing assets of more than $130 trillion across 45 countries. GFANZ is seeking feedback on the guidance and enhancements to critical inputs for measuring portfolio alignment by 12 September. . To measure progress against their net-zero commitments and reallocate capital to support the transition to a net-zero economy, financial institutions need credible, forward-looking metrics to help them determine the climate alignment of the companies within their portfolios. Asset manager says feedback misrepresents, or risks misrepresenting, implied temperature rise metrics, Investors involved with Transition Pathway Initiative raise concerns about series of undesirable consequences, Government says Sustainability Disclosure Requirements to cover corporates, financial services firms, and pension schemes, New investments will focus on decarbonisation, the digital revolution, and emerging markets, Plus:BlackRocks LifePath UK adopts formal ESG policy, High inflation, central banks bumping up interest rates, and prospects of recessions in the US and in Europe have had an impact, Copyright 19972022 IPE International Publishers Limited, Registered in England, Reg No. New regional network with central office in Singapore will support expansion of net-zero finance in Asia-Pacific and help accelerate the regions transition to a net-zero economy. The reports proposed enhancements seek to address current gaps in portfolio alignment metrics and accelerate progress toward the wider adoption of portfolio alignment metrics among financial institutions that are committed to supporting a science-aligned net-zero transition by 2050. In a similar vein, the PAT amended its recommendations regarding tool choice to ensure these did not suggest that all institutions move towards an implied temperature rise (ITR) metric in the long term. All Rights Reserved. Accompanying the TCFDs publications today is the final report from the Portfolio Alignment Team (PAT), which was established by Carney in 2020 to catalyse progress in the analysis and use of portfolio alignment metrics. Portfolio alignment Finally, GFANZ has today released a guide to portfolio alignment for net zero. This report details the progress GFANZ has made in 2022 under our program of work to support financial institutions in operationalizing their net-zero commitments, accelerate capital mobilization to EM&DEs, and advocate for credible policies and standards to enable net-zero transition across the globe. NZIA members have committed to transition their insurance and reinsurance underwriting portfolios to net-zero greenhouse gas (GHG) emissions by 2050, consistent with a maximum temperature rise of 1.5C above pre-industrial levels by 2100, in order to contribute to the implementation of the Paris Agreement on Climate Change. In a statement announcing the withdrawal, Vanguard . However, it wasnt very long ago that the Task Force on Climate-related Financial Disclosures (TCFD) the premier framework for climate risk reporting appeared tofavor the widespread use of ITRsover other kinds of metric. 15 June 2022 was a big day for the climate finance community with announcements made by the UN-backed Race to Zero ("RTZ") campaign and the Glasgow Financial Alliance for Net Zero ("GFANZ").. Race to Zero campaign. GFANZ is a coalition of financial institutions which have committed to aid the transition the global economy to net - zero greenhouse gas (GHG) emissions. interested party or its advisers in connection with this Note. The report aims to drive adoption of portfolio alignment metrics and meaningful convergence . Now open for public comment, the GFANZ Portfolio Alignment Measurement Report provides additional guidance for financial institutions on implementing and selecting portfolio alignment metrics. This suggests it's a flawed metric for conducting the kind of portfolio-level analysis GFANZ members are keen on. members to increase their ambition over time. National leaders in Africa and other parts of the developing world are sure to press GFANZ in Sharm El Sheikh to support specific climate-protection projects in their respective countries. My portfolio value in July 2020 was identical to a year earlier, but life was much less pleasant due to the emergence of COVID-19 and all that meant. Alignment with the UN's Race to Zero adds further constraints. This consultation report outlines how portfolio alignment metrics are used today and seeks feedback on guidance and enhancements to critical inputs for measuring portfolio alignment. How should forward-looking emissions be estimated? The workstream was supported by the GFANZ Secretariat. The stakes are high. Banks, asset managers, asset owners, and insurers want PAMs because they can show how in-sync their portfolios are with global climate goals. For example, on the first judgment what type of benchmark should be built? GFANZ proposes that firms use a single-scenario benchmark built using a fair-share carbon budget approach where possible, and a convergence-based approach if not. Alongside the development and implementation of their own net-zero transition plans, financial institutions require resources to measure their portfolio companies net-zero progress. Other changes made by PAT included adding a suggestion that investors use 1.5C scenarios for their alignment activities, and that they follow Science-Based Targets initiative standards on scenario choice as minimum criteria. GFANZ (Glasgow Financial Alliance for Net Zero) was announced with great fanfare at COP26 in Glasgow, and now boasts 450 members with $130 Trillion in assets under management. Its a hugely exciting moment that this work is now being carried on within GFANZ, said Edward Mason, director of engagement at Generation Investment Management and staff lead for the portfolio alignment workstream in GFANZ. Vanguard, one of the largest investment managers in the world, announced today that it is withdrawing from the Net Zero Asset Managers initiative (NZAM), a major multi-trillion dollar group of investment managers committed to supporting the goal of net zero greenhouse gas emissions by 2050. This 50% by 2030 cut is a key part of the . 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GFANZ regularly publishes resources in the areas of financial institution net-zero transition plans, mobilizing capital for emerging markets and developing economies, and net-zero public policy. Over 90 of the founding institutions of GFANZ have already delivered on setting short-term targets, including 29 asset owners that have committed to reducing portfolio emissions by 25-30% by 2025, as well as 43 asset managers that have published targets for 2030 or sooner. GFANZ members commit to $130tn for Paris alignment Mark Carney, UN special envoy on climate, announcedthat members of the Glasgow Financial Alliance for Net Zero (GFANZ) have committed to align their portfolios with the pathway to the Paris Agreement targets using "gold standard" procedures and metrics, with balance sheets totalling over $130tn. Given that GFANZ counts the world's three largest fossil fuel financiers JPMorgan Chase, Citi and Bank of America among its members, achieving a 50% reduction in seven years almost certainly requires retirement or active environmental management of existing carbon-intensive investments, and definitely a stop to new investments in such assets. | Terms and conditions | Privacy Policy | Cookie Policy, IEA: Renewable powers growth is being turbocharged as countries seek to strengthen energy security, European Union agrees law to fight global deforestation and forest degradation, Circular strategies could cut emissions from materials used in vehicles by 60% by 2040, WWF: Huge rise in demand for sustainable goods during Pandemic. Bringing together the financial sector to accelerate the transition to a net-zero economy. Masons colleague, David Blood, senior partner at Generation, was head of the PAT. 685 1784 92. Institutional Investors Group on Climate Change, GFANZ would like to thank all those who have contributed to our work and development of this report. The Glasgow Financial Alliance for Net Zero (GFANZ) is a global coalition of leading financial institutions committed to accelerating the decarbonization of the economy. Guidance / Tool - 2020 As an increasing number of countries legislate for net zero, investors and lenders will need tools to identify risks and opportunities in the transition to a net zero economy. Course Hero is not sponsored or endorsed by any college or university. "It's a hugely exciting moment that this work is now being carried on within GFANZ," said Edward Mason, director of engagement at Generation Investment Management and staff lead for the portfolio alignment workstream in GFANZ. GFANZ itself finalised its work on the key area of "Portfolio Alignment Management", "supporting the development and effective implementation of Portfolio alignment metrics for financial institutions and driving convergence in the way portfolio alignment is measured and disclosed. Guidance has previously been published by GFANZ on sectoral pathways for transition for financial institutions. Taming the metrics zoo, therefore, is no small matter. This could be addressed with better guidance on portfolio alignment metrics, as contained in a recent Glasgow Financial Alliance for Net Zero (GFANZ) report. The draft Glasgow Financial Alliance for Net Zero (GFANZ) Portfolio Alignment Measurement report is out. GFANZ issues a guidance document for consultation with the aim to enhance, converge, and adopt international best practices for portfolio alignment metrics (PAMs). Still, while it does not favor one metric over another GFANZ does highlight the pros and cons of each PAM, perhaps to nudge institutions towards what the evidence suggests are the higher-quality and more decision-useful versions. Every company, bank, insurer, and investor will need to adjust their business models, develop credible plans for the transition to a low-carbon, climate-resilient future, and then implement those plans. Out of a desire to quickly re-align its portfolio with 1.5C, the fund may choose to rapidly divest from those companies with high Scope 3 emissions, catalyzing a fire-sale that ripples through financial markets. Here he argues, with Dominic Tighe and Tanguy Sn who are members of the portfolio alignment team, that by establishing standards of best practice, the Portfolio . This requires forward looking, robust, decision useful and comparable metrics. The measures announced are a first step towards phasing out the oil and gas sector, but will not be enough to allow Crdit Agricole to fully contribute to the objective of limiting global . The hard truth is that mapping financial portfolios onto desired climate futures is complex, and the output of PAMs will always be plagued by uncertainty. Is GFANZ Greenwashing? At COP26, the group revealed it now represented more than $130trn in assets under management. "To measure portfolio alignment, financial practitioners should consider nine key decisions, the key design judgements," said Anja Ludzuweit, executive director of portfolio alignment measurement for GFANZ. Together, they work to accelerate the world's transition to . We deep dive into what climate metrics financial practitioners . New pan-sector framework for financial institution transition planning supports actionable strategies and unprecedented accountability on net-zero commitments. The recommendation from the TCFD, for example, no longer states that investors should incorporate forward-looking alignment metrics into their target-setting frameworks and management processes. Lombard Odier convened a NCIA and Circular Bioeconomy Alliance event on the subject of "Investing in Nature at Scale". 4 days ago 9 min read. Federated Hermes and GFANZ Keynotes, plus Building Open Source Portfolio Alignment Capabilities . Michael R. Bloomberg, UN Special Envoy on Climate Ambition and Solutions, and Mark Carney, UN Special Envoy for Climate Action and Finance, serve as GFANZ Co-Chairs, and Mary Schapiro serves as the Vice Chair and Head of the Secretariat. The lack of transparency around financial institutions' Net Zero targets and disclosures for portfolio alignment leaves a big opportunity for greenwashing. (Bloomberg) -- Vanguard Group Inc. is walking out of the world's largest climate-finance alliance, marking the coalition's biggest defection to date as . In order to ameliorate PAM transition risk, meanwhile, institutions could be advised to publish standardized, backward-looking metrics alongside their PAMs that adhere to a simple, standardized methodology. The goal is to bring together the best thinking from across the system to accelerate progress . Recommendations like these are supposed to help bring about the convergence around best practices the alliance is looking for, and foster some degree of PAM standardization. What scope of emissions should be included? Further guidance on measuring portfolio alignment and recent recommendations made by the launch on climate data steering committee and the Climate Data Steering Committee on the launch of Net Zero Data Public Utility (NZDPU). However, in its guidance GFANZ does try to nudge institutions toward specific answers. Thanks to all 50+ organizations who engaged with us to get the report to this stage, as well as the technical leadership of Anja Ludzuweit, CFA, and with the support of Edward Mason and David Blood. Announcement made on the expanded partnership with Bloomberg Philanthropies to support developing countries across Africa, Asia, and Latin America to accelerate coal phaseout. The Note has been provided for information purposes only and the information contained herein was prepared at the date, No representation, warranty, assurance or undertaking (express or implied) is or will be made, and no responsibility or, liability is or will be accepted by any member of GFANZ or by any of their respective affiliates or any of their respective. Paris, June 22, 2022 - As part of its "Ambitions 2025" plan presented this morning (1), Crdit Agricole announced decarbonisation targets for the automobile and oil and gas sectors. As the questions above illustrate, these issues are not without theoretical and practical challenges, and investors may reasonably disagree about the best approach. What may be lost in terms of accessibility and the ability to easily compare portfolio alignment across firms would be more than made up for through greater transparency. Sign up for our newsletter today. The draft Glasgow Financial Alliance for Net Zero (GFANZ) Portfolio Alignment Measurement report is out. This report provided a critical assessment of the strengths and trade-offs of the options available to measure the alignment of financial portfolios with climate goals. GFANZ further pledged to deliver as much as $100 trillion in financing to help emerging economies transition to net zero over the next three decades. Registered Office: 1 Kentish Buildings, 125 Borough High Street, London SE1 1NP, Asset Class Report - Equities (December 2022), Country Report - Pensions in the Nordic Region (December 2022), in 2020 to catalyse progress in the analysis and use of portfolio alignment metrics, IFRS Foundations work to develop a baseline global sustainability reporting standard, Glasgow Financial Alliance for Net-Zero (GFANZ), Task Force on Climate-Related Financial Disclosures, Lombard Odier challenges TPI, 2DII responses to TCFD metrics consult, UK asset owners warn TCFD about portfolio alignment proposals, UK reveals plan for economy-wide climate impact reporting regime, Border to Coast adds 2.2bn to second private markets programme, Church Commissioners to vote against companies failing on humans rights, Migros Pensionskasse posts -6% returns, only real estate positive, Print advertising rates and specifications, Digital advertising technical specifications (pdf). GFANZ is committed to accelerating and mainstreaming the decarbonization of the world economy and reaching net-zero emissions by 2050. GFANZ is led by a Principals Group of business leaders representing major firms across the financial sector. On 8 August, the chairs of the Glasgow Financial Alliance for Net Zero (Gfanz) - Mark Carney, Michael Bloomberg and Mary Schapiro - released a statement welcoming the UN Race to Zero's new minimum criteria requiring associated members to get out of all unabated fossil fuels. Speakers: Saker Nusseibeh, David Blood, Leyla Javadova, Bert Kramer, Jared Westheim, Girish Narula, Jaakko Kooroshy, Maarten Vleeschhouwer, Margaret Kuhlow . How should emissions baselines be quantified? in support of a net-zero climate transition. The question is to what extent member institutions are willing to follow them and amend the PAMs they have in use accordingly. GFANZs big challenge, therefore, is to find ways to cajole member institutions into embracing its guidance while minimize this kind of PAM transition risk. One way to address the first half of this problem would be to encourage better disclosure around PAMs, so that financial institutions and metric providers have to explain their choices against the nine key design judgments. This would help identify flawed PAMs and give stakeholders the evidence they need to push for changes. Oliver Wyman provided knowledge and advisory support. Another change was adding that portfolio alignment disclosures include statements about uncertainty related to methodology, data and scenarios, and the reasons for scores changing following methodological, data or scenario improvements. The draft Glasgow Financial Alliance for Net Zero (GFANZ) Portfolio Alignment Measurement report is out. The draft Glasgow Financial Alliance for Net Zero (GFANZ) Portfolio Alignment Measurement report is out. Portfolio alignment Finally, GFANZ has today released a guide to portfolio alignment for net zero. 3233596, VAT No. 5 And the first targets have also been published by Net Zero Banking . The members of the GFANZ Private Finance Working Group for Egypts Nexus for Water, Food & Energy (NWFE) express their strong support for the Government of Egypts (GoEs) ambitious plan for energy transition via NWFE. supporting the creation of frameworks and metrics needed to measure portfolio and sectoral net zero alignment; and; . Industry-wide, they could disrupt the flow of capital toward the net-zero economy in the process elevating the likelihood of a disorderly transition, which could bring systemic risks in its wake. GFANZ Technical Lead - Portfolio Alignment Measurement (Contract) Bloomberg LP New York, NY 3 weeks ago Be among the first 25 applicants More than 100 financial institutions have joined GFANZ through the sector-specific alliances. The report aims to drive adoption of portfolio alignment metrics and meaningful convergence . However, if the PAM were amended to incorporate Scope 3 emissions the metrics output may show it is actually closer to a 2C or even 3C warming trajectory. We need "a whole economy transition," as the GFANZ materials puts it, where "every company, bank, insurer and investor will have to adjust their business models, develop credible plans for the. Following the consultation, the TCFDpared back its support for ITRs, and simply recommended that financial institutions use whichever approach or metrics best suit their organizational context or capabilities to show their alignment with a well below 2C scenario. The Transition Pathway Initiative, for instance, argued that the TCFDs endorsement of ITRs would create pressure on investors to invest time and effort in providing such disclosures. Others spoke out against what they saw as the TCFDpicking winnersin the blossoming competition among PAM providers. GFANZ is not a standard-setter, though, and its influence depends on the support of its member institutions. GFANZ regularly publishes resources in the areas of financial institution net-zero transition plans, mobilizing capital for emerging markets and developing economies, and net-zero public policy. Following the public comment period, GFANZ will release a final report prior to COP27 in Egypt's Sharm el-Sheikh this autumn. The workstream was supported, by the GFANZ Secretariat. We have a singular goal to maximize their long-term returns and give them the best chance for investment success as . Green Finance Briefing: GFANZ moves a step ahead on net zero portfolio alignment. governor who is the chief architect of GFANZ, said earlier this year the alliance has enjoyed . 11 August 2022 Press Release allowance for whether such an alignment would be in the financial best interests of the company.14 The nature of our legislative process produces carve outs, exceptions, delays, or exemptions, any of which . The consultation report's proposed enhancements aim to address current gaps and accelerate progress toward the wider adoption of portfolio alignment metrics among financial institutions . Thanks to all 50+ organizations who engaged with us to get the report to this stage, as well as the technical leadership of Anja Ludzuweit, CFA, and with the support of Edward Mason and David Blood. Given this, the fact that no single metric dominates the space is not surprising. For the avoidance of doubt, nothing express. 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