The former Bank of England governor, Mark Carney, has denied that big banks threatened to leave the climate finance group he leads after it was forced to soften a previous promise to stop financing all coal projects.
Carney said that big US banks had not indicated “any intention” to leave the Glasgow Financial Alliance for Net Zero (GFANZ), a body Carney set up to aid the transition to an economy with net zero carbon emissions.
GFANZ launched last year, as the Scottish city prepared to host the Cop26 climate conference. Carney, who is now UN special envoy on climate action and finance and leads the group, has gathered more than 500 large financial institutions with balance sheets worth $150tn (£132tn) in a voluntary pact to try to limit global heating to 1.5C above pre-industrial levels.
JP Morgan, Morgan Stanley and Bank of America were among the banks reported by the Financial Times to have threatened to quit in relation to potential legal problems around UN guidance that meant GFANZ members could not invest in any new coal projects.
Carney told MPs on the environmental audit committee on Monday that chief executives of the banks had not shared plans to leave with him. However, he acknowledged that the group had been forced to soften language around a firm commitment to exclude coal projects to address “important antitrust concerns”.
The voluntary nature of the group has meant it has been forced to adopt policies acceptable to many institutions that are still providing billions of pounds to new fossil fuel extraction projects, which some campaigners and politicians have criticised. Caroline Lucas, the Green party’s MP, told the committee that membership of GFANZ amounted to “greenwashing” for some lenders.
The group is setting up a new data utility, which will start next year, which Carney said will allow the public to compare banks’ climate targets with their actions to reduce financing of fossil fuels, pressuring lenders to take action.
“If somebody leaves because they view that the commitments are too stringent and they don’t want the public scrutiny then they’re answerable for that,” Carney said, although he also said there was an “important argument for a mandatory approach in terms of regulation”.
Carney praised the UK’s leadership on climate policy, particularly around support for offshore wind, but said that the planning system was holding back development of renewable energy infrastructure.
He said: “One of the challenges […] is the ability to have permitting consistent with the speed of the ramp-up that is required. That’s not unique to the UK but it’s certainly an issue as well in the UK.”
In occasionally testy exchanges, Carney also defended the climate investment record of Brookfield Asset Management, a Canadian investment manager of which he is vice-chair. Brookfield is invested in a shipping company that provides services to oil extractors.
The Labour MP Clive Lewis questioned the “principle” of a climate leader being invested in a company that could benefit from new fossil fuel extraction. Carney repeatedly said he would “not accept” the implied criticism, saying Brookfield is “one of the largest renewable builders and owners in the world”.
“You’re talking about a shuttle tanker – one ship – that’s your point,” he said. “One ship in the North Sea [compared with a renewable energy project] pipeline which is bigger than Sweden’s. You should be able to do the math.”
