Dive Brief:
- Members of the United Nations-backed Net-Zero Banking Alliance voted Friday to immediately cease operations and shift to a guidance-based model, an NZBA spokesperson told ESG Dive.
- The spokesperson said that the vote also “provided a mandate to explore how best to carry this work forward.” Banks will be involved in that process over the next six to 12 months where further plans will be developed.
- NZBA’s decision to shutter makes it the second UN-aligned net-zero industry group to cease operations in 2025. The Net Zero Asset Managers initiative suspended all activities earlier this year shortly after BlackRock, the world’s largest asset manager, exited the group in January.
Dive Insight:
Following an industry exodus that started in the U.S. before expanding to Canada then Europe, NZBA announced Aug. 27 that it would hold the vote to abandon its membership model.
Six U.S. banks — including Goldman Sachs, Wells Fargo, Bank of America, Citigroup, Morgan Stanley and JPMorgan Chase — departed NZBA between late December and early January, before U.S. President Donald Trump’s inauguration. Canada’s six largest banks then followed suit and left the alliance before the end of January.
In July and early August, the exodus crossed the pond, first with United Kingdom-based HSBC and Barclays quitting the group, before Swiss bank UBS announced its withdrawal prior to the vote’s announcement.
In April, following the U.S. and Canada-based departures, NZBA updated its climate target-setting guidelines for banks, with “version 3” eschewing a prior requirement for banks to strictly target limiting global temperature rise to 1.5 degrees Celsius. The NZBA spokesperson told ESG Dive Friday that the alliance’s focus is now to “establish its guidance as a framework” for the industry.
“The Guidance for Climate Target Setting for Banks and supporting implementation resources are the most widely used global banking framework focused specifically on setting decarbonization targets and will remain publicly available,” the spokesperson said in emailed comments. “Individual banks worldwide can continue to use and reference these resources to help develop and deliver on their own net-zero transition plans.”
Jeanne Martin, co-director of corporate engagement for the U.K.-based responsible investment NGO ShareAction, told ESG Dive “it’s bitterly disappointing to see the biggest banks in the world vote to step away from accountability around their commitments.”
“Despite some governments and corporates dialing down on their efforts to tackle the climate crisis, public support for climate action remains high and many investors are all too conscious of the massive risks to the economy of a worsening climate,” Martin said in emailed comments Friday.
NZBA’s website now redirects to a page of resources the alliance has developed for the banking industry. Included on that page is “version 4” of its banking sector target-setting guidance, which NZBA said replaced the April update. The updated guidance removes references to NZBA, the alliance and its signatories and replaces them with references to the banking industry and banks broadly.
