Financial service providers commit to financing net zero

A range of global investment service providers, from stock exchanges to index providers, have signed up to the new Net Zero Financial Services Providers Alliance committing to align their products and services to net zero.

Global investment service providers including credit rating agencies, stock exchanges, auditors and index providers have come together to form the Net Zero Financial Services Providers Alliance (NZFSPA) to accelerate the transition to net zero. It’s a move that Nigel Topping, the UN High Level Climate Champion for COP26 has called turning ambition into action.

The world’s two largest credit rating agencies, six major audit networks, three leading index providers, and two global stock exchanges are among the 18 organisations behind the alliance. All have committed to aligning all their relevant products and services to achieve net zero by 2050 at the latest, and to set meaningful interim targets for 2025 within 12-months of joining.

Asset owners and managers, banks and insurance companies have already committed to net zero goals, aligning their collective tens of trillions of dollars of investments, lending, and underwriting to net zero. They won’t be able to do it unless the critical services and products that support how financial decisions get made are also aligned with net zero. The data, products and services of financial service providers are among the critical components informing that flow of capital.

For example, NZFSPA-member index providers has committed to provide net zero aligned indices by default for all main markets, making it easier for investors to choose to anchor their investments to the net zero transition. For investment advisors, committing to net zero could include ensuring that advice includes net-zero aligned options, that net zero considerations are drawn out in advice or advocating for new products and solutions.

Elsewhere, a stock exchange could require companies to disclose their alignment with net zero, and to provide other necessary data for the market to make investment decisions. Auditors will take companies’ net zero commitments and strategies into account when auditing their financial statements.

“Financial services providers can help turn the trillions of dollars of capital already committed to net zero into the real and tangible investments we need. I welcome the ambition of this alliance in going beyond reaching net zero in their own operations to help turn ambition into action,” said Nigel Topping, the UN High Level Climate Champion for COP26.

Alliance members will set science-based targets for their own emissions and have committed to report on their progress, including publishing disclosures aligned with the recommendations of the Taskforce on Climate-Related Financial Disclosures. The PRI, the UN-supported network of investors, will advise the alliance and help coordinate with net zero asset owners and asset managers.

“It has never been more vital for net zero considerations to be built in at every stage of the investment process. The resources made available by signatories to the initiative will enable strong implementation, helping investors move from commitment to action on net zero by setting clear and practical targets to enact meaningful change,” said Fiona Reynolds, CEO at the PRI.