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 announced that its members have opted to dissolve the membership structure and utilize the climate guidelines established by the group as a reference point. Consequently, the alliance will cease its operations effective immediately.
Mark Carney played a pivotal role in establishing the alliance during his tenure as the UN Special Envoy for Climate Action and Finance ahead of the 2021 UN climate summit in Glasgow. Morningstar DBRS highlighted in a recent analysis that banks’ capacity to assess climate risks is crucial in addressing the challenges posed by the increasing frequency of extreme weather events. The report emphasized the importance of taking immediate actions to mitigate the risks associated with climate change and achieve the goal of net zero emissions by 2050.
The banking alliance, a key component of the broader Glasgow Financial Alliance for Net Zero, aimed to engage the financial sector in climate action initiatives. Carney envisioned the alliance as a strategic platform to facilitate a swift and comprehensive transition to a net zero economy. At its peak, the alliance boasted over 140 member banks worldwide, including Canada’s major financial institutions, which committed to establishing decarbonization targets to expedite emission reductions.
Following the election of Donald Trump in November last year, mounting pressure from U.S. Republicans prompted several prominent American banks to withdraw from the alliance. Subsequently, Canadian banks such as RBC, TD, Scotiabank, BMO, CIBC, and National Bank exited the group in January, expressing their intent to continue climate initiatives independently. Throughout the year, more banks followed suit, with HSBC departing in July.
Despite the disbandment of the alliance, the frameworks and guidance developed by the group for setting climate targets will remain accessible. Efforts are underway to determine the most effective approach to advancing climate finance initiatives beyond the alliance’s dissolution.