The Net Zero Banking Alliance (NZBA) has abandoned its requirement that signatories set targets aimed at keeping global warming below 1.5 degrees celsius. The organizations’ new guidance instead suggests: “Targets should align with the goals of the Paris Agreement, aiming to limit global warming to well below 2°C, striving for 1.5°C, as established by world governments in 2015, be science-based, and support the global transition towards a net-zero economy.”
Launched in 2021, the NZBA is a UN-backed initiative to try to drive greater sustainability in financial services. It initially required members to commit to science-backed strategies aimed reaching net zero by 2050 and keeping planetary warming below 1.5 degrees celsius (about 35 degrees Fahrenheit) above pre-industrial levels. The hope was that the sector would help drive the transition from a fossil-fueled extraction economy to a sustainable one where protection of natural resources is a key factor in financial decisions.
In the last year many banks, including the six largest U.S. banks, all pulled out of the alliance, several of them just before the inauguration of Donald Trump.
However, not all banks support the decision. After the NZBA announced its new policy, Triodos Bank left the alliance for failing to stick to its standards.
“Triodos Bank has decided to leave the Net Zero Banking Alliance (NZBA) due to the recent vote by a majority of member banks for lowering the climate ambition of the alliance and setting less strict requirements,” the company’s statement said.
“The reality is that the global economy is not on track to stay within safe levels of warming and more needs to be done, rather than less. Science is clear that ending new exploration and expansion and phasing-out fossil fuel production in the near future is critical to keep the world in line with global climate goals and to avoid catastrophic climate disruption. Furthermore, banks have an ethical and moral responsibility to drive the transition towards sustainable practices, ensuring that their actions contribute positively to the global effort to combat climate change.”
NZBA’s membership includes 128 banks in 44 countries with $47 trillion under management.
