(Bloomberg) — The room was cramped, the microphone unsteady and HSBC Holdings Plc’s Noel Quinn was the only major bank CEO there.
Wednesday was Finance Day at COP27 in Sharm El-Sheikh, Egypt, when the United Nations climate talks shifted from discussing carbon dioxide in the air and ravaged communities and ecosytems on the ground to the dollars in bank accounts and investment portfolios that can be put to work to fund the transition to clean energy.
The contrast to the same event just a year ago in Glasgow couldn’t have been greater. Unlike 2021, Quinn didn’t have the company of fellow big name chief executive officers such as Larry Fink of BlackRock Inc., Bill Winters of Standard Chartered Plc or Jane Fraser of Citigroup Inc.
Gone too were the bamboo bikes and organic cocktails that had accompanied the C-suite glamor of COP26. Instead, attendees had to grapple with malfunctioning equipment.
Jean-Paul Servais, chair of the International Organization of Securities Commissions, said he got the mic to work by holding it “like a Korean pop-star.” Emmanuel Faber, chair of the International Sustainability Standards Board, said the trick was pointing it toward the back of the room.
The tone of the conversation also was also different from a year ago. Instead of dropping headline-grabbing announcements, panelists discussed the dry and unglamorous details of how to actually deliver on their commitments and what it means in practice for a bank or asset manager to eliminate their financed emissions. They also touched on how to get the entire financial system — from central banks to development banks and pension funds — to throw their resources behind limiting global warming.
Quinn centered his comments on corporate transition plans. He said it was time to focus on the “science-based underpinning” behind corporate decarbonization proposals. He talked of forcing firms to “make clear how they’re going to change their capital investment,” what that means for individual sectors, and how progress might be measured.
The bank bosses who went to COP26 had allowed themselves “quite a lot of self-congratulation,” Christopher Hayward, chairman of policy and resources at the City of London Corporation, said in an interview before COP27. “Promises come easily. Delivery is much harder.”
The finance industry had made some progress though and should be given credit for it, said Nigel Topping, who co-leads the UN-backed Race to Zero Campaign. “We had none of that transparency and none of that rigor and none of that ambition in the public realm a year ago,” he said in an interview at COP27.
The only other banking CEO to speak in the official sessions on Finance Day was Shemara Wikramanayake of Australia’s Macquarie Group Ltd. She started her remarks, which focused on how public funds and private sources of capital can work together to deliver funds for the energy transition in emerging economies, by asking: “Is this mic working? Can you guys hear me?”
HSBC and Macquarie are among the roughly 550 financial institutions that have committed to net-zero financed emissions by the middle of the century, under the auspices of the Glasgow Financial Alliance for Net Zero. Over the past year, GFANZ has added 100 signatories, representing an extra $20 trillion and bringing the total alliance to $150 trillion in combined assets.
“That is a massive mobilization of a wall of capital” to finance the transition to net zero, Topping said.
That Topping of all people is cheering the progress of GFANZ is notable. Race to Zero has made headlines in recent weeks, after GFANZ said members were free to disregard its guidance on phasing out fossil finance. The concern, according to Mark Carney, the former Bank of England governor and chief architect of GFANZ, was tied to potential antitrust issues. The worry is that an industrywide agreement to reduce investments in sectors that contribute to greenhouse gas emissions might be perceived as a cartel.
“It’s a tension obviously that needed to be reconciled,” Carney recently told the UK’s Environmental Audit Committee.
Steering the global financial industry away from fossil finance was never going to be straightforward and cynicism is too easy a response, Topping said. He also suggested that there’s no point in making GFANZ membership criteria so restrictive as to dissuade firms from joining, or staying in.
“If we get to the point where somebody decides they want to leave, then we’ll have to address the question,” he said. “We’re not in the process of saying, ‘Oh you dropped the ball there, you’re out.’”
But not everyone’s convinced the finance industry is going to get the transition right. One of the most consequential outcomes of the first week of COP27 was a series of recommendations from an expert group overseen by Canada’s former environment minister, Catherine McKenna, on what a credible net-zero plan looks like for a finance firm or company, and how to spot greenwashing.
“This is about cutting emissions, not corners,” said McKenna. “The planet cannot afford delays, excuses, or more greenwashing.”
(GFANZ is co-chaired by former Bank of England Governor Mark Carney and Michael R. Bloomberg, the founder of Bloomberg News parent Bloomberg LP.)