A global banking coalition co-founded by Prime Minister Mark Carney in 2021 to combat climate change has decided to dissolve. The UN-supported Net-Zero Banking Alliance confirmed that members agreed to disband the membership structure, opting to utilize the climate guidance developed by the alliance as a reference going forward. Consequently, the alliance will cease all operations immediately.
Carney played a pivotal role in establishing the alliance while serving as the UN Special Envoy for Climate Action and Finance in preparation for the 2021 UN climate conference in Glasgow. Morningstar DBRS recently noted in a commentary the increasing importance for banks to assess climate risks to effectively tackle the challenges posed by more frequent extreme weather occurrences.
The broader Glasgow Financial Alliance for Net Zero, which aimed to engage the financial sector in climate initiatives, included the banking alliance as a significant component. Carney emphasized that the alliance would serve as a strategic platform to expedite the transition to a net-zero economy on a broader and faster scale.
Initially, the banking alliance boasted a membership of over 140 banks worldwide, with prominent Canadian banks such as RBC, TD, Scotiabank, BMO, CIBC, and National Bank committing to setting decarbonization targets to drive emissions reductions. However, following the election of Donald Trump in November, influential U.S. banks withdrew from the alliance due to pressure from U.S. Republicans. Subsequently, Canadian banks also exited the group in January, with additional departures throughout the year, including HSBC in July.
Although the alliance is disbanding, the established frameworks and guidance on setting climate targets will remain accessible. Efforts are underway to determine the best approach to continue advancing climate finance initiatives, as confirmed by the alliance spokesperson.