Mark Carney has dismissed reports that Wall Street banks threatened to walk out of the climate-finance coalition he heads, but also said that "tension" within the group needed to be addressed.
Responding to questions at a hearing on Monday held by the U.K.'s Environmental Audit Committee of the House of Commons, the former Bank of England governor who now co-chairs the Glasgow Financial Alliance for Net Zero, said no institutions had "indicated to me any decision" to leave the group.
JPMorgan Chase, Bank of America and Morgan Stanley had
"Guidance given by one of the associated partners of GFANZ had to be adjusted," Carney said. "It is a tension obviously that needed to be reconciled." He also noted that GFANZ has grown over the past year, and now has well over 500 members representing about $150 trillion in assets.
Race to Zero has since said it's up to individual members to find their own path to a 1.5C-aligned business model, without setting binding requirements. It has argued that the substance of its proposal remains the same, despite the change in wording.
The U.K.'s Environmental Audit Committee is trying to establish the role of finance in Britain's national effort to meet its net-zero obligations. After being
Asset managers and banks have argued that it's unreasonable to expect them to stop supporting oil and gas clients when governments themselves often lack the regulatory and legislative frameworks needed to underpin such policies.
Carney, who has in the past cautioned against heaping too much criticism on the finance industry's efforts to cut emissions, told lawmakers on Monday that "in order to have an economy moving to net zero, you need to have a financial system that is orientated to net zero."
As governments and regulators get a better sense of how the finance industry is tackling emissions, it might make sense to gradually introduce stricter requirements, Carney said. It would be prudent to lay the groundwork now, "as it tends to take a couple of years" before such rules can be rolled out, he said.
"Over time we will see how financial institutions perform against those targets," he said. "Some will miss, others will hit and some will outperform; the question will be, is it because they are not very good at it or don't take it seriously? Or is it a lack of ambition in climate policy more broadly?"
Ultimately, companies that make progress on their climate goals will be worth more, Carney said.
(GFANZ is also co-chaired Michael R. Bloomberg, the founder of Bloomberg News parent Bloomberg LP.)
