The Net Zero Banking Alliance (NZBA) will increase flexibility around climate targets in its framework, allowing its members to set targets aligned with the upper temperature limit sought by the Paris climate agreement.
Members voted to introduce less stringent targets "in response to changing external circumstances and member needs", the NZBA said today.
The NZBA is a voluntary global initiative with more than 120 banks as members. The group aims to align financing with reaching net zero greenhouse gas (GHG) emissions by 2050 — in line with the Paris agreement. The Paris accord seeks to limit the rise in global temperature to "well below" 2°C above pre-industrial levels, while pursuing efforts to limit this to 1.5°C.
Members "voted overwhelmingly in favour of adopting proposed changes", the NZBA said today. Banks that join the alliance commit to developing long-term and intermediate targets towards net zero GHG emissions and to reporting on progress towards these.
The changes to the guidance "acknowledge a wider range of net zero pathways that align with the temperature goals of the Paris agreement… This acknowledgment increases flexibility for banks with exposures to a range of markets and sectors to manage targets and transition across their balance sheet", the NZBA said.
The alliance also intends to further support members, including around sectoral engagement and to help members understand new and emerging practices and approaches.
"Over 100 member banks have already set independent sectoral targets using net zero by 2050 1.5°C pathways. There is nothing in the adopted changes that would cause them to move away from this. 1.5°C remains the guiding star", an NZBA spokesperson told Argus.
But the alliance noted that in recent years "the external landscape for banks has rapidly changed". The amended framework recognises that "net zero transitions in the real economy are progressing at different speeds across sectors and regions and that regulatory requirements for climate risk and disclosure have increased in some jurisdictions", the spokesperson said.
Several large US banks exited the initiative earlier this year, days ahead of US President Donald Trump's return to the White House.
Netherlands-based, sustainability-focused Triodos Bank today said that it would leave the NZBA, as "the new guidelines fall short of the needed urgency to align loans and investments portfolios" with the 1.5°C goal.
