After staying on the sidelines during all previous climate summits, the world's financial industry has at last decided to stand up and be counted. On Wednesday, designated "Finance Day" at Glasgow's COP26 climate change conference, a group of 450 banks, insurance companies and asset managers committed to align over $130 trillion worth of assets under their control with a net zero emissions target by 2050.
This does not mean that this entire amount will be spent on zero-carbon projects. Financial institutions will still fund fossil fuel industries, for which they have attracted criticism. But it does mean that going forward, there will be a pullback on such funding in favour of more sustainable activities. Over time, this could lead to a major reallocation of assets and significantly influence the behaviour of companies, consumers, investors and governments.