Morgan Stanley, one of the world’s biggest investment banks, has announced its departure from the Net-Zero Banking Alliance (NZBA).
The bank’s decision follows on from similar announcements by Citigroup, Bank of America, Wells Fargo and Goldman Sachs, which have all opted to withdraw from the alliance, which was established by the UN Environment Programme’s finance initiative.
In a statement published by Reuters, Morgan Stanley said that despite withdrawing from the group, its commitment to assisting the world transition to net-zero emissions remains unchanged, noting that it aims “to contribute to real-economy decarbonisation by providing our clients with the advice and capital required to transform business models and reduce carbon intensity.’
Progress Update
A progress update published by the NZBA last October found that most banks were taking ‘significant steps’ towards meeting their climate goals.
All banks that join the alliance are required to voluntarily committing to independently setting their first targets for reducing emissions associated with their financing activities in carbon-intensive sectors of the economy within 18 months of becoming members.
In addition, members also commit to developing transition plans within 12 months of setting targets, and pledge to publish a full set of sectoral targets covering all or a substantial majority of the carbon-intensive sectors where they have material exposure within 36 months.
As of the end of May last year, some 97% of the 122 banks due to have set their first sectoral targets have done so, while close to two-thirds of the 91 banks due to publish transition plans had done so.
However, the progress update also indicated a number of areas that were in need of further attention, with banks citing challenges relating to the quality of client greenhouse gas emissions data, unclear decarbonisation pathways, and a lack of a supportive policy environment.
Commenting on the challenges facing the NZBA alliance following Goldman Sachs’ departure in December, representative group Stand.Earth said, “The alliance must not seek to appease or accommodate potential defectors, or remain complacent when its members dilute their targets, as doing so undermines the very purpose of the coalition and jeopardises global climate goals”.
