Banks’ ‘net zero’ pledges must align with temperature limits By Reuters

By David Lawder

NEW YORK (Reuters) -“Net-zero” financing commitments from banks and asset managers should align with goals to limit the global average temperature increase to 1.5 degrees Celsius and be backed by “credible” metrics and targets, the U.S. Treasury said on Tuesday.

The Treasury released a document setting out new principles as world leaders, celebrities and business moguls, converged on Manhattan to focus attention on the climate crisis during the U.N. General Assembly week.

It aims to promote consistency, credibility and transparency across net-zero pledges by financial institutions.

Among the nine principles, the Treasury prescribed that financial institutions should practice “transition finance” that can support decarbonization in high-emitting sectors that are difficult to abate. This includes providing financing, investment, or advisory services to support “a managed and accelerated transition from high-emitting to zero- or near-zero-

emissions assets.”

Examples of this would be to phase out coal-fired power plants before the end of their useful lives to be replaced with wind or solar power, the Treasury said.

Institutions also should bring their clients’ and portfolio company investments into line with temperature limits. U.S. Treasury officials told reporters that this goal can fit in with institutions’ fiduciary responsibilities to clients.

DATA RESEARCH FUNDING

The Treasury also announced that several philanthropic groups have pledged $340 million to help develop research, data and technical resources intended to help financial institutions develop and execute “robust, voluntary net-zero commitments.”

The funding will also support work to facilitate the transition planning efforts of non-financial sectors of the economy, the Treasury said.

Groups included in these commitments include the Bezos Earth Fund, Bloomberg Philanthropies, Climate Arc, ClimateWorks, Hewlett Foundation, and Sequoia Climate Foundation.

U.S. Treasury Secretary Janet Yellen said her goal for the new principles is to “affirm the importance of credible net-zero commitments and to encourage financial institutions that make them to take consistent approaches to implementation.”

She said in excerpts of remarks to be delivered later on Tuesday that there would be $3 trillion in global…