Reclaim Finance response to consulta1on on dra3 GFANZ paper: “Defining Transi1on Finance and Considera1ons for Decarboniza1on Contribu1on Methodologies”

Reclaim Finance strongly opposes the GFANZ proposal to introduce 'Expected Emission Reductions' (EER) as a metric for transition finance. The organization argues that EER relies on subjective, unprovable counterfactual baselines—similar to the failed logic of carbon offsets—which would allow financial institutions and polluters to manipulate data to justify continued funding for fossil fuels. While Reclaim Finance supports the concept of 'Expected Cumulative Emissions' (ECE) to track alignment with net zero, it warns that 'avoided emissions' metrics are generally unsuitable for climate solutions, except in the specific case of managed phaseouts of high-emission infrastructure like coal plants. The document concludes that instead of creating complex new metrics, financial institutions should improve financed emissions methodologies and adopt robust transition plans including strict exclusion criteria and an end to fossil fuel expansion finance.

• The proposed Expected Emission Reductions (EER) methodology is fundamentally flawed because it relies on a 'business-as-usual' (BAU) counterfactual baseline and projected pathways that are subjective, opaque, and easily manipulated.
• Reclaim Finance argues that the EER approach mirrors the conceptual failures of the carbon offset market, where biased baselines are used to maximize credit generation.
• The EER methodology risks incentivizing the continued flow of capital to fossil fuel companies and other major polluters without guaranteeing credible transition plans.
• The use of 'avoided emissions' as a metric for climate solutions is criticized as a form of greenwashing, though it is considered less problematic for the managed phaseout of specific high-emission infrastructure like coal plants.
• Reclaim Finance supports the concept of Expected Cumulative Emissions (ECE) as a logical tool for financial institutions to evaluate if a company's annual emission reductions are aligned with net zero.
• The document identifies a lack of evidence in the GFANZ paper to support the claim that current financed emissions targets disincentivize the provision of transition finance to carbon-intensive sectors like steel and cement.

APA

Reclaim Finance (2023). Reclaim Finance response to consulta1on on dra3 GFANZ paper: “Defining Transi1on Finance and Considera1ons for Decarboniza1on Contribu1on Methodologies”. https://reclaimfinance.org/site/wp-content/uploads/2023/11/RF-comments-on-GFANZ-transition-contribution.pdf

Chicago

Reclaim Finance. Reclaim Finance response to consulta1on on dra3 GFANZ paper: “Defining Transi1on Finance and Considera1ons for Decarboniza1on Contribu1on Methodologies”. 2023. https://reclaimfinance.org/site/wp-content/uploads/2023/11/RF-comments-on-GFANZ-transition-contribution.pdf.

Wikipedia

{{cite press release |author=Reclaim Finance |title=Reclaim Finance response to consulta1on on dra3 GFANZ paper: “Defining Transi1on Finance and Considera1ons for Decarboniza1on Contribu1on Methodologies” |date=November 2023 |url=https://reclaimfinance.org/site/wp-content/uploads/2023/11/RF-comments-on-GFANZ-transition-contribution.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@misc{reclaimfinance2023reclaim, author = {{Reclaim Finance}}, title = {{Reclaim Finance response to consulta1on on dra3 GFANZ paper: “Defining Transi1on Finance and Considera1ons for Decarboniza1on Contribu1on Methodologies”}}, publisher = {Reclaim Finance}, year = {2023}, month = nov, url = {https://reclaimfinance.org/site/wp-content/uploads/2023/11/RF-comments-on-GFANZ-transition-contribution.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }