The announcement that the Net Zero Banking Alliance (NZBA) is to cease operations is an “unfortunate step backward” at a time when climate change continues to intensify, according to a leading industry commentator.
David Carlin of D. A. Carlin and Company, which advises governments and corporate bodies on climate risk and finance, wrote on LinkedIn that the decision to wind up the NZBA was a “real loss”, adding that businesses need to step up to the plate and address a climate situation that is only getting worse.
“We need to accept that this is fundamentally not a self-resolving problem,” Carlin wrote. “If finance continues to fuel climate change, financial breakdown will be the consequence.
“Between laws of economics and laws of physics, there’s only one winner. And it’s not economics.”
Member withdrawal
The decision to wind up the NZBA follows the withdrawal of several major members, as well as a recent vote to restructure the initiative as a framework for guidance rather than a membership-based alliance.
In August, the NZBA said that it was ‘pausing’ activities to undertake a member vote on its future direction, after the departure of several big names, including Goldman Sachs, UBS, HSBC, JPMorgan, Citi, Morgan Stanley and Macquarie.
The NZBA was launched by the UN Environment Programme in 2021 with 43 founding banks. This, in time, grew to include more than 140 institutions, representing around $74 trillion in assets as of last year.
As a condition of their membership, members pledged to align operational and financed emissions with pathways limiting global warming to 1.5°C, with interim 2030 targets. In 2024, the group expanded its requirements to include capital markets activities such as debt and equity underwriting.
However, the alliance also faced political scrutiny, particularly in the US, leading to at first a trickle – and then a torrent – of high profile departures.
Guidance for Climate Target Setting for Banks
As well as announcing its decision to wind up proceedings, the NZBA has also published a Guidance for Climate Target Setting for Banks, which it says will remain as a resource for institutions developing climate transition plans.
“As someone who saw NZBA’s inception and understood its guiding vision, I believe there was much more value in the alliance than headlines showed,” Carlin wrote on LinkedIn.
“I tip my hat to my many former colleagues at United Nations Environment Programme Finance Initiative (UNEP FI) and hundreds of others in the banking sector who put so much time and effort into moving banking forward.”
One thought on “End of Net Zero Banking Alliance an ‘unfortunate step backward’”
Comments are closed.