The Net-Zero Banking Alliance (NZBA) recently unveiled the second iteration of its Guidelines for Climate Target Setting, sparking both praise and criticism from industry observers.

Established three years ago to align global banking activities with net-zero greenhouse gas emissions by 2050, the NZBA comprises 142 member banks, collectively representing 40% of global banking assets. The revised guidelines, set to take effect on April 22, 2024, underscore what the Alliance describes as its continued dedication to combatting climate change.

Key enhancements to the guidelines include an expanded scope, now encompassing not only lending and investment activities but also capital markets arranging and underwriting activities. This extension aims to provide a more comprehensive approach to climate target setting, acknowledging the significant role these activities play in banking portfolios.

Moreover, the revised guidelines explicitly reference the imperative of limiting global temperature rise to 1.5ºC, aligning with the most ambitious target outlined in the Paris Agreement. However, critics argue that the guidelines fall short in addressing crucial issues, such as the discrepancy between sectoral intermediate targets and net-zero commitments among member banks.

Notably, the guidelines face scrutiny for their non-binding nature, which has led to inconsistencies in target-setting practices among member banks. Concerns persist regarding the effectiveness of the guidelines in driving meaningful climate action, particularly in light of recent departures from sustainability initiatives by some US banks.

Despite these criticisms, progressive members of the NZBA, including Amalgamated Bank, Ecology Building Society, and Triodos Bank, have voiced their support for stronger climate measures.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

BankTrack, an NGO focused on bank accountability, urges NZBA member banks to align their targets with their net-zero commitments and exclude financing for fossil fuel projects.

As the urgency of the global climate crisis intensifies, stakeholders emphasise the need for decisive action from the banking sector. With the new guidelines set to shape the trajectory of climate finance, the pressure mounts for banks to demonstrate genuine commitment and accountability in their efforts to mitigate climate change.