Glasgow Financial Alliance for Net Zero (GFANZ) consultation Defining transition finance and considerations for decarbonisation contribution methodologies

The document argues against the use of Expected Emission Reductions (EER) and avoided emissions as metrics for transition finance, claiming they rely on subjective, non-conservative baselines and risk rewarding high polluters. It advocates for the use of Expected Cumulative Emissions (ECE) to monitor alignment with net-zero pathways and emphasizes that transition finance should not be used to support the fossil fuel sector, which the author asserts is making performative efforts to transition.

• The Expected Emission Reductions (EER) approach is criticized as an estimation rather than a measurement because it relies on a counterfactual 'business-as-usual' (BAU) baseline and a projected successful transition pathway, both of which are based on subjective and opaque assumptions.
• The EER methodology is compared to the conceptual foundation of the carbon offsets market, which has faced a 'legitimacy crisis' due to methodological failures.
• The use of 'avoided emissions' to evaluate climate solutions is rejected, noting that the Science Based Targets initiative (SBTi) does not allow these to count toward targets and that the approach often involves exaggerated baselines.
• The document recommends the adoption of Expected Cumulative Emissions (ECE) as a required part of transition plans, as it allows financial institutions to evaluate if annual emission reductions are actually aligned with net zero.
• There is a concern that the EER approach would incentivize the allocation of finance toward the highest polluters and reduce pressure on fossil fuel companies to move away from oil, gas, and coal.
• The author argues that the oil and gas industry's commitment to low-emission alternatives is minimal, citing IEA data that capital spending on these alternatives was less than 5% of upstream spending in 2022.
• The proposal to treat 'Enablers' (such as lithium mining for EVs) as part of the Climate Solutions value chain is described as 'alarming' because it could reward unsustainable business models that threaten ecosystems.

APA

Carbon Market Watch (2023). Glasgow Financial Alliance for Net Zero (GFANZ) consultation Defining transition finance and considerations for decarbonisation contribution methodologies. https://carbonmarketwatch.org/wp-content/uploads/2023/11/26-10-2023-GFANZ-consultation-on-transition-finance.pdf

Chicago

Carbon Market Watch. Glasgow Financial Alliance for Net Zero (GFANZ) consultation Defining transition finance and considerations for decarbonisation contribution methodologies. 2023. https://carbonmarketwatch.org/wp-content/uploads/2023/11/26-10-2023-GFANZ-consultation-on-transition-finance.pdf.

Wikipedia

{{cite press release |author=Carbon Market Watch |title=Glasgow Financial Alliance for Net Zero (GFANZ) consultation Defining transition finance and considerations for decarbonisation contribution methodologies |date=September 2023 |url=https://carbonmarketwatch.org/wp-content/uploads/2023/11/26-10-2023-GFANZ-consultation-on-transition-finance.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@misc{carbonmarketwatch2023glasgow, author = {{Carbon Market Watch}}, title = {{Glasgow Financial Alliance for Net Zero (GFANZ) consultation Defining transition finance and considerations for decarbonisation contribution methodologies}}, publisher = {Carbon Market Watch}, year = {2023}, month = sep, url = {https://carbonmarketwatch.org/wp-content/uploads/2023/11/26-10-2023-GFANZ-consultation-on-transition-finance.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }