(Bloomberg) — The world’s biggest climate alliance for banks suspended its activities and proposed a vote on scrapping its current structure after a wave of exits that started on Wall Street grew into a global exodus.
The Net-Zero Banking Alliance, which has been virtually wiped off the North American map and is now starting to lose ground in Japan, Australia and Europe, is asking remaining signatories to decide whether the group should continue to exist as a membership-based organization, according to a statement on Wednesday.
The announcement comes four years after the group’s founding members, which included the world’s biggest banks, stated their commitment to aligning their lending and investment portfolios with achieving net zero greenhouse gas emissions by 2050. The reality is NZBA “never truly challenged the fossil fuel-oriented business models of major banks,” said Lucie Pinson, the founder of climate nonprofit Reclaim Finance.
“For those working to protect the environment and the climate, this underlines once again the limits of voluntary corporate commitments and the urgent need for binding measures, including strong regulatory action, to trigger real change,” Pinson said.
Since the unveiling of the Paris Agreement at the end of 2015, banks globally have provided almost $6.4 trillion of bonds and loans to oil, gas and coal companies, compared with about $4.3 trillion for green projects, according to data compiled by Bloomberg.
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Now, NZBA is proposing it continue as an advisory body without members.
“The Steering Group believes this is the most appropriate model to continue supporting banks across the globe to remain resilient and accelerate the real economy transition in line with the Paris Agreement,” NZBA said in the statement. The proposed model will also facilitate ongoing “engagement with the global banking industry to develop further guidance and tools needed to support them and their clients,” it said.
The outcome of the vote is due to be made public at the end of next month, the alliance said.
The planned vote follows a stunning string of defections that started a month after Donald Trump won the US presidential election, with Goldman Sachs Group Inc. leading an exodus that quickly swept through Wall Street. More recently, HSBC Holdings Plc has led the way in Europe with Barclays Plc and UBS Group AG following it out of NZBA in August.
Banks in the US had faced attacks from the Republican Party, which accused net zero alliances of colluding against the fossil-fuel industry. In numerous GOP states, financial firms that signed up to such alliances faced bans and the threat of antitrust lawsuits. In Europe, banks that have left NZBA said they did so because the group had lost much of its appeal as a global forum for exchanging ideas after being abandoned by its North American members.
The alliance was created in 2021 — back when climate finance was buoyed by crisis-era interest rates. It initially required members to align their financing operations with the goal of limiting global warming to 1.5C. But in an effort to stop members from leaving, it dropped that requirement earlier this year.
Most banks leaving the alliance have said they plan to continue helping clients transition toward a low-carbon economy, and most have held on to internal net zero commitments.
The alliance “encourages the banking sector to remain steadfast” in implementing its net zero commitments, NZBA said.
The development comes amid speculation that NZBA was about to start losing members based in the European Union, where net zero goals are enshrined into law. Bloomberg has previously reported that BNP Paribas SA, the EU’s biggest bank by assets, was questioning the value of continued NZBA membership as recently as June.
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