Banks’ ‘net zero’ pledges must align with temperature limits: US Treasury

The US Treasury on Tuesday released new principles for “net-zero” financing commitments from banks and asset managers on Tuesday, saying they should align with goals to limit the global average temperature increase to 1.5 degrees Celsius and be backed by credible metrics and targets.

The document, released as world leaders, celebrities and business moguls converged on Manhattan to focus attention on the climate crisis during the US General Assembly week, also prescribed that financial institutions should bring their clients’ and portfolio investments into line with temperature limits.

The Treasury also announced that several philanthropic groups have pledged $340 million to help develop research, data and technical resources intended to help financial institutions develop and execute “robust, voluntary net-zero commitments.”

The funding will also support work to facilitate the transition planning efforts of non-financial sectors of the economy, the Treasury said.

Groups included in these commitments include the Bezos Earth Fund, Bloomberg Philanthropies, Climate Arc, ClimateWorks, Hewlett Foundation, and Sequoia Climate Foundation.

US Treasury Secretary Janet Yellen said her goal for the new principles is to “affirm the importance of credible net-zero commitments and to encourage financial institutions that make them to take consistent approaches to implementation.”

She said in excerpts of remarks to be delivered later on Tuesday that there would be $3 trillion in global investment opportunities associated with the transition to net-zero each year between now and 2050.