A global banking consortium, co-founded by Prime Minister Mark Carney in 2021 to combat climate change, has decided to disband. The UN-supported Net-Zero Banking Alliance disclosed that its members voted to dissolve the membership structure in favor of utilizing the alliance’s climate guidelines as a reference point. Consequently, the alliance has ceased its operations with immediate effect.
Carney played a pivotal role in establishing the alliance during his tenure as the UN Special Envoy for Climate Action and Finance in preparation for the 2021 UN climate summit in Glasgow. Morningstar DBRS recently emphasized the growing importance for banks to assess climate risks accurately to address the challenges posed by increasing occurrences of extreme weather events. The commentary highlighted the necessity of taking immediate actions to meet the net zero target by 2050 and mitigate the escalating physical risks associated with climate change impacts.
The banking alliance, a critical component of the broader Glasgow Financial Alliance for Net Zero, aimed to engage the financial sector in climate mitigation endeavors. Carney envisioned the alliance as a strategic platform to expedite the transition to a net zero economy on a broader scale and at a faster pace.
At its peak, the banking alliance boasted a membership of over 140 banks worldwide, including all of Canada’s major banks, committed to establishing short and long-term decarbonization objectives to drive emissions reduction efforts. Following the election of Donald Trump in November last year, influential U.S. Republicans’ pressure prompted leading U.S. banks to withdraw from the alliance. Subsequently, Canadian banking giants such as RBC, TD, Scotiabank, BMO, CIBC, and National Bank exited the alliance in January, expressing their intent to sustain climate initiatives independently.
Throughout the year, additional banks followed suit, with HSBC being the latest to depart in July. The frameworks and guidelines developed by the alliance for setting climate targets will remain accessible, as efforts continue to determine the best approach for advancing climate finance initiatives beyond the alliance’s dissolution.
