Sunak says global financial system is being 'rewired' as he announces new eco pledges

Rishi Sunak has said world leaders are “rewiring” the global financial system to deal with climate change and the UK will become the first ever net zero financial centre.

On the finance-themed day at the COP26 climate summit in Glasgow, the chancellor announced that firms controlling around 40% of global assets will align themselves to the Paris Agreement 1.5C warming limit, creating over “$130 trillion of private capital waiting to be deployed and a greener financial system underway.”

He said: “This is a historic wall of capital for the net zero transition around the world.”

The UK will “go further and become the first net zero aligned financial centre,” he said as he unveiled new UK plans, which had been trailed ahead of his speech.

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The UK government will force British financial institutions and UK-listed companies to publish plans on how they will decarbonise and transition to net zero, in sweeping reforms the chancellor hopes will stop “greenwashing”.

An independent taskforce will next year define what’s required, with companies obliged to publish plans from 2023.

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“Six years ago Paris set the ambition. Today in Glasgow we are providing the investment needed to deliver that transition,” he said.

The $130 trillion of assets being “aligned with the Paris Agreement” comes from 450 firms that are part of the Glasgow Financial Alliance for Net Zero (GFANZ), a body chaired by Mark Carney, former Bank of England governor and UN special envoy on climate action and finance..

Critics are sceptical about GFANZ’s promise because it is a voluntary and self-regulated body.

“Right here right now is where private finance draws the line,” Mark Carney said in a panel following Mr Sunak’s speech.

“Up until today there was not enough money in the world to fund the transition. And this is a watershed. So now, it’s [about] plugging it in,” said Mr Carney.

Also on the agenda for finance day are the contentious issues of voluntary carbon markets and climate finance. A long standing promise by rich countries – generally the most polluting – to fund $100bn a year by 2020 of climate measures in poor countries, is set to only be met in 2023.

Climate finance is a thorn in the side of negotiations, which are predicated on trust and making commitments in a spirit of cooperation. Poor countries may be less willing or able to trust and engage in the talks if they see rich countries breaking their promises.

Mr Sunak said London would also commit £100 million ($136.19 million) to make climate finance more accessible to developing countries, who have long said that the climate finance they’ve been promised is difficult to access.

It comes as Boris Johnson said the “eyes of the world will be on COP26 for the next ten days”.

“Let’s keep moving forward, keep 1.5C alive and make this the moment we irrefutably turn the tide against climate change,” he said on Twitter.

Yesterday the prime minister welcomed a series of announcements by the assembled leaders.

Key announcements from the talks so far include:

• UK will force financial firms and major businesses to publish plans about how they will get to net zero.

• Rishi Sunak also announced 40% of global assets totalling $130 trillion will align with the Paris Agreement.

• At least 110 countries representing 85% of the world’s forests agreed to end and reverse deforestation by 2030.

• South Africa will get help to decarbonise from the UK the EU, the US, France and Germany, in a new partnership that shows how side deals agreed outside of the traditional UN process can help close the emissions gap.

• Scores of world leaders signed a pledge to slash potent climate heating gas methane by 30% by 2030, which significantly help slow short term warming.

• Japan committed extra $10bn climate finance over five years, meaning rich countries could hit $100bn a year target one year sooner than expected, US climate envoy John Kerry said, as it “has the ability to leverage” a further $8bn

• Over 40 world leaders back plan to fund clean technology around the world by 2030, the UK government announced

• India finally came forward with a net zero promise – the 2070 target is 20 years later than the key 2050 date but still a big step forward, especially with its commitment to significantly slash emissions by 2030

• Five countries, including Britain and the United States, and a group of global charities promised $1.7bn to support indigenous people’s conservation of forests and strengthen their land rights

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