UN-Led Net-Zero Banking Alliance Disbands as Major Banks Exit
The Net-Zero Banking Alliance (NZBA), a climate-focused initiative led by the United Nations, has officially disbanded. The collapse comes after several major banks, including JP Morgan Chase, Bank of America, and HSBC, left the alliance, leaving it dominated by European lenders.
The NZBA, launched in 2021, initially saw rapid growth, with its membership tripling to 144 institutions across 44 countries by 2023. However, momentum slowed due to political shifts and litigation fears among American lenders. Despite this, the alliance marked a significant milestone in 2023 when major banks earned more fees from green bond issuance than from fossil fuel deals in bond markets for the first time.
Critics argue that the NZBA's demise will have little impact on climate action, citing its lack of real action and doomed fate. However, the collapse highlights the fragility of coordinated climate efforts among banks. Stricter new guidance, such as the requirement for banks to publish high-level climate transition plans within 12 months and use only certified removals for carbon credits, may accelerate divergence among banks in their climate transition efforts.
The dissolution of the NZBA serves as a reminder of the challenges in coordinating global climate action. While some banks have shown progress in green bond issuance, the overall trend shows continued funding into fossil fuels. As banks navigate new guidelines, the future of climate-focused banking initiatives remains uncertain.
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