The UN Environment Programme Finance Initiative (UNEP FI) has brought together 43 banks from around the world to form the UN-convened Net Zero Banking Alliance (NZBA) ahead of COP26, which is to be held in Glasgow later this year.
The announcement coincides with the launch of the Glasgow Financial Alliance for Net Zero (GFANZ) by former bank of England governor Mark Carney; who has taken on the role of finance adviser to UK prime minister Boris Johnson ahead of the summit.
Commenting on the launch, the prime minister said: “Uniting the world’s banks and financial institutions behind the global transition to net zero is crucial to unlocking the finance we need to get there – from backing pioneering firms and new technologies to building resilient economies around the world.
“The Global Financial Alliance for Net Zero will lead this charge ahead of COP26 to scale-up our ambition, accelerate our shift and help us to build back greener together.”
GFANZ brings together existing and new net zero finance initiatives into a single, sector-wide strategic form.
Together with the UN-convened Net-Zero Asset Owner Alliance, which was launched in 2019, the NZBA will become founding members of the GFANZ.
Ahead of the Glasgow summit, GFANZ will work to mobilise the trillions of dollars necessary to build a global zero emissions economy and deliver on the goals of the Paris Agreement.
All initiatives in GFANZ require signatories to set science-based, interim, and long-term goals to reach net-zero no later than 2050. These goals are supplemented by member-determined short-term targets and action plans.
NZBA beings together an initial cohort of 43 of the world’s biggest banks with a focus on delivering the banking sector’s ambition to align its climate commitments with the Paris Agreement goals with collaboration, rigour and transparency, UNEP FI stated.
All of the banks have committed to:
- Transition the operational and attributable GHG emissions from their lending and investment portfolios to align with pathways to net-zero by 2050 or sooner.
- Within 18 months of joining, set 2030 targets (or sooner) and a 2050 target, with intermediate targets to be set every five years from 2030 onwards. All targets will be regularly reviewed to ensure consistency with the latest science (as detailed in IPCC assessment reports).
- Banks’ first 2030 targets will focus on priority sectors where the bank can have the most significant impact, ie the most GHG-intensive sectors within their portfolios.
- Within 36 months of joining, banks will set a further round of sector-level targets for all or a significant majority of specified carbon-intensive sectors, including: agriculture; aluminium; cement; coal; commercial and residential real estate; iron & steel; oil & gas; power generation; transport.
- The commitment is designed to ensure that banks engage with their clients’ own transition and decarbonisation, promoting real economy transition rather than only financial sector withdrawal.
- Annually publish absolute emissions and emissions intensity in line with best practice and within a year of setting targets, disclose progress against a board-level reviewed transition strategy setting out proposed actions and climate-related sectoral policies.
- Take a robust approach to the role of offsets in transition plans.
The initial cohort of 43 banks spans the globe:
|Bank of America
|La Banque Postale
|Lloyds Banking Group
|Republic Financial Holdings
|Trinidad & Tobego
|Shinhan Financial Group