A similar process played out across the financial sector in the lead up to COP26. The Glasgow Finance Alliance for Net Zero (GFANZ) was created to standardise an approach to how financial institutions should set net zero aligned policies, targets and approaches.
Over two years, the financial sector developed an industry-wide approach which is premised on banks partnering with customers to finance their transition. So the money increasingly stands ready. Deploying it at the scale required to fund the net zero transition is the next challenge.
There are steps which energy companies can take to unlock that capital and direct funding to where it is needed most. An energy industry standard on company transition plans would enhance market and investor confidence.
Plans which place emphasis on practical implementation will have the greatest utility. A starting point may be steps to transition energy mix, scale clean infrastructure and renewable energy, and reduce emissions. In time, a project pipeline will help banks and investors to identify and fund the changes required.
By partnering with the energy sector, banks can facilitate the capital investment needed to reduce emissions at scale. But we know that an orderly transition requires continued financing to maintain oil and gas supplies, at declining levels as demand for oil and gas declines.
So, we are committed to finance energy companies who play an active role in the transition, supporting them to invest in new technologies. We want to be by the side of companies as they have the capabilities required to deliver this change - technical expertise, strong balance sheets, and experience in delivering big infrastructure projects.
The more granular transition planning becomes at a company level, the more banks will be able to finance energy companies to lead this transition.