Published: 11:29, November 4, 2021 | Updated: 11:29, November 4, 2021
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Banks controlling $130 trillion commit to Paris goals
By ​Angus Mcneice in Glasgow

Britain's Chancellor of the Exchequer Rishi Sunak makes a speech at the COP26 UN Climate Summit in Glasgow, Scotland, Nov 3, 2021. (ALBERTO PEZZALI / AP)

Financial institutions controlling 40 percent of the world's assets have aligned with the Paris Agreement, United Kingdom Chancellor of the Exchequer Rishi Sunak announced during the 26th United Nations Climate Change Conference of the Parties, or COP 26, in Glasgow on Wednesday.

Under the stewardship of the Glasgow Financial Alliance for Net Zero, the financial sector will attempt to accelerate the transition to a net-zero economy, Sunak said.

The UK finance minister announced that 450 financial institutions from 45 countries have committed to limiting emissions and aligning with the Paris Agreement, which aims to keep global warming below 2 C and preferably closer to 1.5 C by mid-century. Collectively, these banks and funds control assets worth around $130 trillion.

"Six years ago, Paris set the ambition. Today in Glasgow, we are providing the investment we need to deliver that ambition," Sunak said.

The Glasgow Financial Alliance for Net Zero is chaired by UN Special Envoy for Climate Action and Finance Mark Carney, who is also a former governor of the Bank of England, the UK's central bank.

"What you're hearing today is that the money is here, but that money needs net-zero aligned projects," Carney said in Glasgow. "A pool of that capital has been carved out for the transition in emerging and developing economies, and not at some distant point in the future, but for this decade."

Sunak also announced that the UK will become what he called the "first ever net-zero aligned financial center". He said the government will make it mandatory for companies to publish a "clear, deliverable plan" setting out how they will decarbonize and transition to net zero. Sunak said an independent task force will be setup to hold companies to account.

Sunak also said he expects a target of $100 billion in annual climate finance from rich nations to developing nations will be met by 2023, after the target was missed last year.

Several major deals were announced on Tuesday, the final day of the World Leaders Summit.

China was among more than 100 countries that promised to halt and reverse deforestation during the next decade.

The Glasgow Leaders' Declaration on Forest and Land Use involves the United States and the UK, as well as heavily forested nations including Brazil, Canada, Russia, Indonesia and the Democratic Republic of Congo. Its 114 signatories are home to 85 percent of the world's forests.

UK Prime Minister Boris Johnson, who is hosting this year's summit in Glasgow, Scotland, hailed the "landmark commitment" as one of the first major outcomes of COP 26.

So far, the pledge has secured $19.2 billion of public and private funding.

China's special climate envoy, Xie Zhenhua, told reporters at COP 26 that the nation has already made large gains in its reforestation efforts. Last year, China reached a forest coverage rate of 23.04 percent, Xie said, up from 8.6 percent 70 years ago.

Also on Tuesday, 105 nations signed up to a global partnership to reduce methane emissions by 30 percent during the next decade.

The partnership, which was first announced in September by the European Union and the US, covers countries that emit around 40 percent of the world's methane, which is a far more potent greenhouse gas than carbon dioxide.

Another major deal saw more than 40 countries, including China, endorse the new Glasgow Breakthrough Agenda, which will see countries and businesses work together to scale up and speed up the development and deployment of clean technologies.

Meanwhile, Nigeria became the latest large emerging economy to commit to a net-zero pledge on Tuesday, when it announced plans to achieve the milestone before 2060.