As the finance industry promises to allocate vast sums of money to the fight against climate change, a growing number of nonprofits, academics and activists are questioning the credibility of those commitments.

A group led by former central banker Mark Carney said Wednesday that financial firms representing US$130 trillion have pledged to meet net-zero CO2 targets by the middle of the century. The initiative, unveiled by the Glasgow Financial Alliance for Net Zero, has been dubbed “historic” by the U.K. government, which is hosting the COP26 climate summit.

Under the terms of GFANZ, which was convened by the United Nations, signatories must commit to use science-based guidelines to reach net-zero carbon emissions by 2050, and to provide 2030 interim goals. But the proliferation of net-zero commitments is raising concerns around how well the banks, insurers and asset managers are actually following through.

“We urgently need to focus on the quality and integrity of promises made by financial institutions, not simply their quantity,” said Ben Caldecott, director of the Oxford Sustainable Finance Group at the University of Oxford and director of the U.K. Centre for Greening Finance & Investment. “And we need to ensure that commitments actually support the real economy transition.” 

Lucie Pinson, executive director at French nonprofit Reclaim Finance, characterized the recently announced pledges as “hot air” and called on the industry to enact “concrete cuts in oil, gas and coal financing we really need.”

Carney has spearheaded GFANZ since it was created in April to push for private-sector contributions to accelerate the transition to net-zero emissions. It started with about 160 financial firms and now has more than 450. Michael R. Bloomberg, the owner of Bloomberg News parent Bloomberg LP, became co-chair of GFANZ this week.

In a joint op-ed published Wednesday, Carney and Bloomberg wrote that “ramping up adoption of clean energy and other sustainable infrastructure fast enough to avoid the worst impacts of climate change will require trillions of dollars in new investment -- likely in the ballpark of US$100 trillion. Most of that will have to come from the private sector, especially after the enormous toll that the pandemic has taken on governmental budgets.”

“Up until today there was not enough money to finance the transition,” Carney said on a COP26 panel. “The money is here, but that money needs net-zero aligned projects.”

Financial firms have faced mounting skepticism about their pledge to fight climate change as banks continue to help arrange loans and bond sales for fossil-fuel companies and insurers continue to provide underwriting services to oil, gas and coal producers.

UN Secretary-General Antonio Guterres has called for a more stringent set of definitions around net zero. In a recent speech, he said “there is a deficit of credibility and a surplus of confusion over emissions reductions and net-zero targets, with different meanings and different metrics.” For that reason, Guterres said he plans to establish an expert panel “to propose clear standards to measure and analyze net zero commitments from non-state actors.”

Caldecott called Guterres’s announcement “timely” and said in a statement that “it’s essential that this works starts as soon as possible.”

Achieving net zero by 2050 and staying within 1.5 degrees Celsius of warming “means stopping financing for fossil-fuel expansion today,” said Ben Cushing, a campaign manager at the Sierra Club, an environmental pressure group. “That’s the key test for whether these commitments are aligned with reality or just an attempt at good PR.”

Separately, the Science Based Targets initiative, which certifies corporate climate policies and introduced a Net-Zero Standard for companies last month, published a report Wednesday aimed at providing a foundation for reaching consensus. The paper should be seen as a “first step” to develop a science-based net-zero standard for financial institutions, SBTi said.

The absence of consistency “around what net zero means allows for financial institutions to claim they are doing more than they are and makes verification of any claims impossible,” said Cynthia Cummis, technical director and founding partner of SBTi.

“Finance is prepared to do its part,” said Chuka Umunna, head of JPMorgan Chase & Co.’s environmental, social and governance operations in EMEA, in an interview. “We have a mandate and authority to act, but we can’t do it on our own. We need governments to step up as well.”