The financial sector is waking up to the challenge of climate change and taking part in the solution to it.
The Glasgow Financial Alliance for Net Zero (GFANZ), the world’s largest coalition of financial institutions committed to transitioning the global economy to net-zero greenhouse gas emissions, was launched in April 2021 at COP 26. It is intertwined with the Race To Zero, a global campaign by the UNFCCC to rally leadership and support from diverse stakeholders for net zero initiatives.
Under GFANZ, a number of Alliances have been formed, from Net-Zero Asset Owner Alliance (NZAOA), Net-Zero Asset Managers Initiative (NZAM), Net-Zero Insurance Alliance (NZIA), the Net-Zero Banking Alliance (NZBA) among others. Those sector-specific alliances aim to adjust the financial flows to be consistent with a pathway towards low greenhouse gas emission and climate-resilient development, as defined in the Article 2.1c) of the Paris Agreement.
BASE has been working within the framework of Net-Zero in different levels, more closely to the NZBA. The industry-led, UN-convened Net-Zero Banking Alliance brings together a global group of banks, currently representing about 40% of global banking assets and over 110 banks, in the efforts to decarbonise their loan and investment portfolios.
The United Nations Environment Programme (UNEP) has engaged BASE for strategic advice on how to best support banks signatories of the NZBA in the delivery of their commitments, with a special focus on banks with headquarters or subsidiaries in developing countries through a facility that provides technical assistance.
The Net-Zero Banking Alliance’s objective is to reinforce, accelerate and provide guidance to banks’ decarbonisation strategies, through an internationally coherent framework. The Net-zero Banking Alliance has been accredited by the UN Race to Zero’s Expert Peer Review Group.
UNEP-FI hosts the governing body of the Principles of Responsible Banking (PRB) and convenes the Net Zero Banking Alliance. The Principles are the world’s foremost sustainable banking framework. Through the Principles, banks take action to align their core strategy, decision-making, lending and investment with the UN Sustainable Development Goals, and international agreements such as the Paris Climate Agreement.
The PRB commitments establish that the banks are required to set targets and a strategy to achieve them within 4 years of signing the Principles of Responsible Banking. Both PRB and NZBA signatories have 18 months period since becoming signatories to set targets.
BASE was engaged by UNEP-FI as a global partner in the preparation of capacity-building sessions for banks who are signatory of the PRB and/or the NZBA on the topic of climate target setting. The workshops include staff members of signatory banks from developing countries in the regions of Latin America and the Caribbean (LAC), Middle-East, North Africa and Sub-Saharan Africa (MENA + SSA) and Asia. The two rounds of workshops cover the topics of the Foundations of Climate Target Setting, which included the four steps of understanding the landscape, measuring and disclosing emissions, setting science-robust targets and developing a transition plan.
The support BASE is providing extends from April 2022 to December 2022.
BASE has been engaged by IDB Invest to provide technical assistance to Produbanco in Ecuador on their process of setting their NZBA emission reduction targets and transition plan. The technical assistance covers the support in the measurement of a baseline of GHG emissions according to PCAF and target setting according to NZBA guidelines, preparing a gap analysis for TCFD reporting, creating a short-term action plan and a mid to long-term strategic plan for Net-Zero implementation, and concluding with capacity building and knowledge transfer to the Bank’s staff members.
The technical assistance BASE is providing extends from May 2022 to early 2023.
Another bank in Trinidad & Tobago is also counting on the support of BASE on their climate target-setting journey.
