Big banks want to act on climate change — so what's stopping them?

Our planet is changing. So is our journalism. This story is part of a CBC News initiative entitled Our Changing Planet to show and explain the effects of climate change and what is being done about it.

As the dust settles from the recent UN climate summit in Glasgow, there's still plenty of debate about what was actually accomplished at COP26 and how various nations will reach the lofty environmental targets they've pledged.

There is little debate, though, that the world's finance sector took centre stage at the two-week event, in a way that hasn't happened over the decades at any of the previous climate talks.

That's in large part due to Mark Carney, the former governor of both the Bank of Canada and the Bank of England. His latest task, as the United Nations' special envoy on climate action and finance, was to rally the finance industry to make green investment a priority.

At COP26, he announced the formation of a group of 450 global banks, pension funds, insurance companies and other finance firms — with resources totalling $130 trillion US — all pledging to fund the transition to a low-carbon world and to limit global warming. 

As Carney told CBC News at the conference, "One of the key messages of this COP is: The money is there." 

Having that funding available is important, but it's also only the first step in having the financial sector act more quickly and more substantially to the threat of climate change.

WATCH | Mark Carney helped broker an agreement with 450 major financial institutions:

Carney's COP26 announcement was met with a level of skepticism by environmental critics, since many of the institutions that signed on, including Canadian banks, still finance fossil fuel projects and have made no commitments to stop doing so. 

It will be difficult for any amount of new green investment to offset the continuing growth of oil, natural gas and coal production, said Ben Caldecott, director of the Oxford Sustainable Finance Group at the University of Oxford.

Pressure has been building on the sector in recent years to do more; COP26 only drew further scrutiny on the industry.

"That pressure is healthy," said John Stackhouse, a senior vice-president with the Royal Bank of Canada, which is one of the world's top bankers to the fossil fuel industry.

"We're hearing it from corporate clients, as well as individuals — and we hear from employees. All that is good and there's a range of views," he said.

One of the challenges the financial sector faces when pouring more money toward lowering the world's emissions is the risk-averse nature ingrained in the DNA of many banks: Early-stage technologies are inherently risky.