Two pension funds leave Mark Carney’s Green Alliance
Pension funds Cbus Super and Bundespensionskasse have become the first institutions to leave a financial alliance to fight climate change led by former Bank of England Governor Mark Carney.
Australia’s Cbus left the Net Zero Asset Owner Alliance in recent months citing resource issues, while Austria’s Bundespensionskasse left the Paris Aligned Asset Owners group this year, also due to a lack of internal resources, a said the PAAO. The coalitions are part of the Glasgow Financial Alliance for Net Zero (Gfanz) which was launched to much fanfare last year.
Members of the seven subgroups under the Gfanz umbrella have to comply with complex time and staff-consuming data tracking and reporting requirements, which alliance banks have also raised as a concern. .
Financial institutions also face a growing list of environmental disclosure requirements imposed by regulators around the world.
A $70 billion fund Cbus, which joined the NZAOA in 2020, said it left the alliance to “focus our resources on our internal climate change activities”, adding that it had not changed its goal of net zero emissions by 2050.
Bundespensionskasse, a €1.3 billion fund, declined to comment on why it left the alliance, but said its “long-term goal is a climate-neutral investment approach”. The group has pledged to achieve net zero emissions on all of its assets under management by 2040. Gfanz declined to comment.
One of Gfanz’s subgroups, the Net Zero Investment Consultants Initiative which launched with 12 members a year ago, did not disclose whether any companies had left.
The loss of members is likely to add to growing pressure on Gfanz, which is designed to bring together as many financial institutions as possible and encourage climate action.
Major US banks have threatened to quit the alliance, fearing the commitments could expose them to legal challenges, the FT reported last week.
Objections have centered largely on fears that a coordinated restriction of support to the fossil fuel sector could breach competition law. Such antitrust concerns prompted the United Nations Race to Zero initiative – which sets standards for Gfanz membership – to issue revised guidelines last Friday, removing a stipulation that “no new coal projects” should be supported.
Critics, meanwhile, say Gfanz is not demanding enough of its members and that voluntary private sector-led initiatives will not bring the pace of change needed to avert catastrophic warming.
Nigel Topping, co-head of Gfanz, was among those calling for tougher climate regulations last week. “We cannot rely on voluntary action alone,” he said. Governments, regulators and the private sector must work together to “address market failures and provide conducive regulatory environments to dramatically accelerate the transformation to a 1.5C aligned economy”.
In the United States, financial institutions face a particularly difficult environment. A growing number of Republican lawmakers have denounced products labeled as “sustainable” and stepped up a campaign against environmental, social and governance investments.
At the same time, institutions are being scrutinized by US regulators and politicians. The chief executives of several major lenders were quizzed last week by members of Congress on topics including the climate – a discussion that included questions about funding from the State Financial Officers Foundation, a group of US public officials who oppose action on climate change.
Asked by House Democrat Sean Casten if they were still funding the group, JPMorgan Chase’s Jamie Dimon and Wells Fargo’s Charles Scharf both said they didn’t know.
Asked if they would commit to ending all support for the SFOF, which Casten said was “spreading misinformation”, Dimon said “if this were true, we would probably cancel it”, and Wells Fargo’s Charles Scharf said “I agree with Mr. Dimon”.
Additional reporting by Simon Mundy