AllianceBernstein joins the Net-Zero Finance Coalition

(Bloomberg) — AllianceBernstein Holding LP is among the big investment firms adding its name to the world’s largest climate finance coalition as the COP27 summit in Egypt turns its attention to the role of banks and asset managers in steering capital toward a lower-carbon enterprise Future.

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Northern Trust and Capital Group Inc. also joined the Net Zero Asset Managers initiative, a sub-unit of the Glasgow Financial Alliance for Net Zero, according to a statement Wednesday. The news coincided with COP27 Finance Day, which will be a slimmer affair than last year in Scotland, after a number of prominent chief executives, including BlackRock Inc.’s Larry Fink and Citigroup Inc.’s Jane Fraser, opted to stay away.

An energy crisis and a changing political landscape in the US are making it difficult for banks and investors to turn their backs on fossil fuels. Financial firms are also increasingly nervous about the legal ramifications of joining net-zero alliances, with some in the US claiming such goals conflict with fiduciary duties. And in some cases, climate-finance alliances have even been compared to cartels.

Read more: Blackstone and Pimco bypass Net-Zero group even after concessions

Depending on the outcome of the US midterm elections, these legal risks may increase. Republican warnings that corporate ESG efforts could violate the country’s antitrust laws are already prompting some companies to slow down their climate efforts.

But there is also a legal risk of making climate promises that companies don’t keep.

“These may be voluntary commitments, but they are commitments nonetheless,” said Sonali Siriwardena, Partner and Global Head of ESG at Simmons & Simmons in London. “So companies should be wary of getting caught in the tide of unrealistic ambition, as it can expose them to both litigation and reputational risk if they fail to meet those commitments.”

There are now more organizations monitoring climate pledges. A group appointed by the United Nations has defined a set of tests that determine whether net-zero promises are genuine or “dishonest.” The panel of experts, appointed by UN Secretary-General Antonio Guterres and chaired by Canada’s former Environment Minister Catherine McKenna, is making recommendations “to prevent net-zero being undermined by false claims, ambiguity and ‘greenwash'”.

In an effort to address concerns from the finance industry, GFANZ recently allowed its members to ignore a United Nations-backed group, Race to Zero, which had proposed binding limits on fossil-fuel finance. It also assured signers that GFANZ sub-alliances are “subject only to their own governance structures.”

(GFANZ is co-led by former Bank of England Governor Mark Carney and Michael R. Bloomberg, founder of Bloomberg News parent company Bloomberg LP.)

Read more: 10 things to see at the COP27 summit

Highlights:

  • Click here to read highlights from Tuesday’s presentations

  • China strikes climate with new emissions deadline

  • Satellite detects methane plume near Iranian oil and gas facilities

  • Mark Carney Sees “Wall of Opportunity” for Energy Investors

  • UN body names “greenwasher” and calls for net-zero regulation

  • Click here to learn more about Bloomberg Green at COP27

Here are the latest developments. All times Egypt.

Carney Says Regulations Key to Unlocking Climate Finance (9:27 a.m.)

The trillions of dollars needed for the global energy transition “will not come from governments,” said Mark Carney, co-chair of the Glasgow Financial Alliance for Net Zero.

Still, governments will play a key role in “unlocking” those funds, he said. Policymakers should “align financial regulation to net zero” by mandating net-zero transition plans by “pricing the externalities of carbon” and “mobilizing capital for emerging and developing economies by ensuring that the public funding into the private sector, private funding is pushing scale,” said Carney.

“The necessary private funding will be there to meet the government’s commitments to address climate change if they wish,” he said.

Africa recognizes need to pursue green growth (8:43 am)

Africa’s common position at the COP27 summit recognizes the need for growth alongside the obligation to provide electricity to its 600 million people who lack access to energy, said Acting Executive Secretary of the UN Economic Commission for Africa Antonio Pedro. This energy shortage is why the continent is mining natural gas as a “transition fuel,” Pedro said in an interview with Bloomberg Television.

In the quest for so-called losses and damages — compensation by rich countries for damage done to developing countries because of global warming — Africa is also encouraging investment in renewable energy, Pedro said. As an example, he cited the Great Blue Wall Initiative, which aims to protect 2 million square kilometers of conservation and conservation areas along the East African coast.

Affordable debt would be a COP27 win, says Egypt’s Maait (8:38am)

A world plagued by inflation, rising debt and increasing climate impact needs development banks to get involved, said Egypt’s Finance Minister Mohamed Maait. “More funding at a reasonable cost and on reasonable terms,” ​​Maait said, would count as a success at COP27.

Egypt and Norway build 100MW green hydrogen plant in Red Sea (8:12 a.m.)

Egypt and Norway’s Scatec have signed an agreement on the sidelines of climate talks in Sharm El-Sheikh to start the first phase of a project to build a green hydrogen plant in the Red Sea. The plant in Egypt will have a capacity of 100 megawatts.

According to Net-Zero Asset Managers Group, Allianz has grown to 291 (8:00 a.m.)

According to the Net Zero Asset Managers initiative, 86 investors have set initial targets for the proportion of assets managed in line with achieving net zero emissions by 2050 or earlier, with the total number of asset managers committed to net Commit to zero emissions, rising to 291.

This brings the total number of managers with such targets to 169, collectively representing over $55 trillion in assets under management, according to a statement by NZAMi on Wednesday. New signatories include Capital Group, Northern Trust and AllianceBernstein.

Zimbabwe signs deal with SkyPower for 500MW solar plant (7:47 am)

Zimbabwe has signed an agreement with SkyPower Global to build a 500-megawatt solar power plant, Acting Executive Secretary of the United Nations Economic Commission for Africa Antonio Pedro said in an interview.

The deal was signed at the COP27 summit in Sharm el-Sheikh, he said, without giving details.

Global CO₂ hotspots identified by Al Gore-backed project (7:00 a.m.)

A consortium of dozens of nonprofit research organizations on Wednesday launched a free online platform detailing global greenhouse gas emissions in 20 economic sectors.

Climate Trace, viewable in a web browser, includes a zoomable world map that displays and ranks the dirtiest 72,000 power plants, oil refineries, airports, ships and more. The group used satellite imagery and machine learning, as well as more conventional techniques, to build what they believe is the largest source of greenhouse gas emissions data available.

Climate change could cost Africa two-thirds of its GDP growth (2:01 am)

A new study shows that global warming could cut Africa’s economic growth by two-thirds by the end of the century unless significant investment is made in adapting to climate change.

Current climate policies are likely to result in temperatures exceeding the pre-industrial average by 2.7C, which will curb Africa’s growth rates by 20% by 2050 and 64% by 2100, Christian Aid said in a report published on Wednesday. Even a 1.5°C rise in temperature would reduce growth rates by 34% by the end of the century, it said.

While Africa is responsible for about 4% of the emissions warming the planet, it is already being hit hard by a changing climate. Devastating cyclones and floods have hit south-east and west Africa this year, while the Horn of Africa is in the midst of its worst drought in four decades.

–With support from Salma El Wardany, Yousef Gamal El-Din, Paul Richardson, Mirette Magdy, Akshat Rathi and Siobhan Wagner.

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