In an interview that European Central Bank supervisors distributed to banks within a week of the ISSB’s announcement at COP26, John Berrigan, the Commission’s chief financial officer, discussed the taxonomy of EU and plans for a new regulation on sustainable finance disclosure, not to mention the ISSBs.
Berrigan also did not mention the other major financial sector initiative that emerged from COP26: the Glasgow Financial Alliance for Net Zero (GFANZ) brought together by Mark Carney, the former FSB chairman who is now the special envoy of the United Nations for Climate Action and Finance.
Carney has brought together 450 banks and insurers to, among other goals, raise trillions of dollars of capital to finance decarbonization in emerging and developing countries.
The precise figure he cited, $ 130 trillion, raised some skeptics, but the scale of the ambition is impressive, and most banks of any size have signed on.
These developments reflect the dramatic shift in the financial sector’s view on climate change over the past two years.
Pressure from some outspoken investors contributed to this shift, while regulatory stress tests exposed the vulnerability of loan portfolios to rising temperatures and policy-induced increases in carbon prices. But bankers are also people.
They now believe that they will sleep easier and be able to look their children in the eye if they are part of the green transition, rather than myopic refractories funding the last ton of coal mined and the last barrel of Brent crude.
The ISSB and GFANZ could give bankers the tools they need to help their clients finance and manage the green transition. And the American and European authorities, if they bury their differences, could allow these good intentions to be translated into more effective actions.
That would mean fewer acronyms – and, more importantly, a clearer path to net-zero.
Howard Davies is president of the NatWest group. Project union.