MPs to examine role of financial sector in net zero transition

A new inquiry looking into the financial sector and its role in helping the UK to achieve net zero goals is to be launched by the Environmental Audit Committee (EAC).

Over the course of the UK’s presidency of COP26, climate finance and decarbonising the economy has played a major part in discussions.

However, very few nations and financial institutions have made explicit plans to phase out fossil fuels and to be transparent about investments in the industry.

Environmental Audit Committee Chairman, Rt Hon Philip Dunne MP, said: ‘Mobilising financial institutions to support decarbonisation of the economy, for instance through the work of the Glasgow Financial Alliance for Net Zero, has been a key feature of the UK’s COP presidency.

‘A year on from when Mark Carney launched the GFANZ initiative, our Committee is keen to explore how this work can be most effective at driving down global emissions. Collectively, the alliance represents nearly 40% of global private financial assets and represents an enormous opportunity to influence meaningful action to cut emissions and support renewable energy generation.

‘I encourage anyone with views on the role of private finance in decarbonising the economy to submit evidence to our Committee.’

Mr Carney, UN special Convoy for Climate Action and Finance, launched the GFANZ at President Biden’s climate summit in April last year.

By November, the group represented over 450 financial firms from 45 countries, responsible for assets over $130tn.

GFANZ members committed to accelerating decarbonisation, reaching net zero emissions by 2050 and to collaborate on achieving targets set in the Paris Agreement.

The EAC is investigating UK financial institutions, due to their potentially pivotal role in ensuring reductions in fossil fuels and Government net zero targets are met.

The Committee is asking for written evidence submissions, alongside public statements from leading GFANZ signatories on their policies on fossil fuel and renewable energy investment.

They will also be asked whether current geo-political events have impacted their views, following the International Energy Agency’s (IEA) May 2021 conclusion that no new investment in fossil fuel projects is necessary.

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