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Banks struggling to stay aligned to netZero commitments

Banks struggling to stay aligned to netZero commitments

Perhaps not shockingly, banks appear to be backing out of their high-profile GFANZ climate commitments as they realize the potential costs associated with doing so (see story).

This is further evidence that non-binding initiatives to combat climate change are insufficient, while binding initiatives are unacceptable. What the banks can't stand, as Carney put it, are "legally binding strictures." For what possible reason not? To what extent do they take the issue of global warming seriously? I'm curious as to what sort of dedication it was.

Despite the ambiguity surrounding ESG, its guiding principle, along with that of its fellow market-led strategies (socially responsible investing, corporate social responsibility, impact investing, divestment, etc.), is the avoidance of mandatory policy and regulation.

Some have proposed the acronym ABCR to describe all of these methods ("Anything but Costly Regulation"). Using an ABCR strategy, we are successfully combating climate change. That tackling something as massive as climate change won't break the bank, but rather lead to greater financial success, is expressed.

Consequently, we can expect to see more initiatives from the private sector that are undertaken purely on a voluntary basis. Inadequate as they currently are, and likely to get even worse.

Just to be clear, I'm not arguing that governments are inherently more efficient than the private sector; I'm arguing that the kind of policy and regulatory changes that are obviously needed can only be achieved *through* government. In corporate headquarters, the requisite swaying mechanisms are missing. Considering this constraint, for businesses to take credible climate action, they must now publicly declare that the ABCR plan is failing and publicly advocate for legally binding policies at the national and international levels.

Connor Disselkoen

Front End Engineer

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