A global banking consortium co-founded by Prime Minister Mark Carney in 2021 to combat climate change has decided to dissolve. The UN-backed Net-Zero Banking Alliance spokesperson announced that members voted to disband the membership model and utilize the group’s climate guidelines as a point of reference. Consequently, the alliance will cease operations immediately.
Carney played a pivotal role in establishing the alliance as the UN Special Envoy for Climate Action and Finance in preparation for the 2021 UN climate conference in Glasgow. Morningstar DBRS recently emphasized the increasing importance for banks to assess climate risks to address challenges posed by more frequent extreme weather occurrences. The commentary highlighted the urgency to meet the net zero target by 2050 and the rising physical risks associated with climate change.
The banking alliance, a significant component of the broader Glasgow Financial Alliance for Net Zero, aimed to engage the financial sector in climate action. Carney envisioned the alliance as a strategic platform to facilitate a comprehensive and expedited transition to a net zero economy. Initially, the alliance boasted over 140 global banks, including Canada’s major banking institutions, committing to establishing decarbonization goals for both the short and long term.
Following the election of Donald Trump in November, significant pressure from U.S. Republicans prompted major American banks to withdraw from the alliance. Subsequently, Canadian banks, such as RBC, TD, Scotiabank, BMO, CIBC, and National Bank, exited the coalition in January, expressing their intent to pursue climate initiatives independently. Throughout the year, more banks, including HSBC in July, followed suit in leaving the alliance.
Although the alliance disbands, the frameworks developed by the consortium, including guidance on setting climate targets, will remain accessible. Efforts are ongoing to determine the most effective approach to continue advancing climate finance initiatives, as stated by the alliance’s spokesperson.
