UN-Backed Net-Zero Banking Alliance Disbands Amid Leadership Shifts and US Bank Exit
The Net-Zero Banking Alliance (NZBA), a UN-backed initiative aimed at reducing banks' carbon footprint, has ceased operations. Launched in 2021, the alliance saw a significant exodus of major US and European banks following changes in its approach and leadership shifts. The alliance's dissolution leaves a void in the global banking sector's commitment to combating climate change.
The NZBA, established under the UN Environment Programme's Finance Initiative, initially gained traction with nearly 150 members. However, a series of events led to its decline. In 2016, following Donald Trump's election, several major US banks, including Bank of America and Citigroup, left the alliance. More recently, in 2022, Barclays, a British banking giant, also exited the NZBA.
The alliance's transition from a member-based alliance to a framework, along with a softening of its language on climate goals in 2023, further contributed to its demise. ShareAction, a London-based charity, criticized the changes, stating the end of the NZBA is 'bitterly disappointing' and a step away from accountability on climate commitments.
The NZBA's cessation of operations leaves a gap in the banking sector's collective effort to combat climate change. While some banks like Commerzbank and Deutsche Bank continue to actively participate in net-zero transition processes, the departure of major US banks raises questions about the sector's commitment to sustainability. The UN and other stakeholders must now consider how to rebuild and strengthen such initiatives to meet the 2050 net-zero goal.
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