Governments Across North America Signal Their Net-Zero Plans
Last month saw a significant increase in climate ambition from world leaders and investors. The Government of Canada introduced Budget 2021, which includes significant new spending for sustainability-related and green policies and programs. The Federal Government committed to engaging with provinces and territories with the goals of making climate disclosures, consistent with the Task Force on Climate-related Financial Disclosures (TCFD), part of regular requirements for a “broad spectrum of the Canadian economy.” This approach is consistent with international peers – including the UK, EU, and prospectively the US – moving towards widespread and/ or mandatory climate disclosures.
U.S. President Joe Biden hosted a Climate Leaders’ Summit to discuss progress towards the Paris Agreement. The summit saw increased global ambition, including the U.S.’ new goal of cutting emissions to half 2005 levels by 2030. Canada announced its new target to reduce emissions by 40-45% by 2030 from 2005 levels, a modest increase from the previous target of 36%. Increasingly ambitious targets send policy signals to the market, providing clarity on the intended speed and breadth of decarbonization. These announcements also show the increased importance of 2030 as a target year, motivating corporates and investors to develop end-of-decade action plans if they haven’t already.
A new investor initiative – the Glasgow Financial Alliance for Net Zero (GFANZ) – was also announced, bringing together asset owners, managers, insurers and banks to accelerate the transition to net-zero emissions. This initiative, chaired by Mark Carney, includes 160 firms responsible for over $70 trillion in assets, which will be accredited by the UN Race to Zero Campaign and use science-based guidelines to achieve net-zero emissions. The Net Zero Asset Managers initiative and Net-Zero Asset Owners Alliance, as well as the newly announced Net-Zero Banking Alliance (NZBA), will convene under GFANZ as a forum for coordination. This alliance represents a breakthrough in mainstreaming climate finance and alignment across the financial system on the importance of climate change mitigation.