Global banking climate alliance folds four years after launch

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A climate alliance of top global banks has folded some four years since its launch after its members encountered political pressure and failed to meet the objectives it had ambitiously set out.

The Net-Zero Banking Alliance said on Friday that its members had voted to disband: “As a result of this decision, NZBA will cease operations immediately.”

The group lost its highest profile members from Wall Street and European financial centres, as well as Japan and Canada, over the past year as banks with exposure to the US came under pressure from threats of litigation alleging collusion.

The biggest US lenders, including JPMorgan Chase, Citigroup, Bank of America, Morgan Stanley and Wells Fargo, left the alliance before the Trump inauguration. They were followed this year by major European lenders, including HSBC and Barclays.

Remaining member banks had voted in April to ditch a pledge to support the alignment of the global economy with a target in line with a UN accord to limit global warming to 1.5C above pre-industrial levels, instead aiming for a less stretching target.

The NZBA’s guidance can still be used by banks, and many have said they would continue to assess climate risks on an individual basis.

The alliance had been set up in 2021 with the backing of Mark Carney, now the Canadian prime minister, when he was UN special envoy for climate action. It came at the peak of enthusiasm for financial sector climate action ahead of the UN climate summit in Glasgow, which took place in the wake of the pandemic. Equivalent asset managers, insurers and asset owner collaborations set up at similar times have also run into a political wall.

Even as the financial and insured losses from extreme weather and rising temperatures continue to climb, US President Donald Trump reiterated his position in an address to the UN last week that climate change was a “con job”, and related policies a “green scam”. 

The US has withdrawn from the Paris agreement for the second time under a Trump administration and is not expected to send a delegation to the upcoming UN COP30 climate summit in November.

The NZBA had supported up to 150 banks’ efforts to develop “independent and individual climate-related business strategies and to set more than 500 sectoral net zero targets,” according to the UN environment programme’s website.

“It’s bitterly disappointing to see the biggest banks in the world vote to step away from accountability around their commitments to prevent the worst effects of global heating,” said Jeanne Martin co-director of corporate engagement at the responsible investment non-profit organisation ShareAction.

“Senior bankers need to be far more courageous in this decisive moment — for all our futures”.

Public support for climate action remained high, Martin argued, and investors were conscious of the risks to the economy as climate change drove up food prices and caused destruction to homes and lives through natural disasters.

Lucie Pinson, director of the campaign group Reclaim Finance, said however that she would not “mourn” NZBA. “Its purpose was never to take real action, but to create the illusion of measures in order to ward off the risk of regulation . . . the institutions genuinely committed to containing global warming will continue to act.”