Net Zero Banking Alliance needs to double down on members’ compliance

Sixteen NGOs have written to the UN Environment Programme Finance Initiative (UNEP-FI) and the Net Zero Banking Alliance (NZBA) steering committee amid concerns they are not doing enough to ensure members have the correct guidance to meet their net-zero requirements.

The civil society organizations, which include ShareAction, BankTrack and Reclaim Finance, said the credibility of the UNEP-FI is on the line amid reports it is unknown how members of the seven net-zero alliances under the Glasgow Financial Alliance for Net Zero (GFANZ) umbrella will be held accountable.

In June, GFANZ members were asked to meet a more stringent set of criteria to be accredited and slash emissions 50% by 2030. However, guidance to do so has not yet been issued.

Kelly Shields, senior campaign officer at ShareAction, said: “It is vital that the Alliance updates its guidelines in line with the strengthened Race to Zero criteria to ensure member banks act with the ambition needed to address the climate crisis.

“With 115 member banks representing almost 40% of global banking assets, the NZBA has a key role to play in limiting global warming to a 1.5C world.”

The NZBA plans to review its guidelines by April 2024, but the NGOs call for this to be brought forward so that members can adjust their policies in time for the June 2023 deadline.

Additionally, in a letter the group of NGOs asked the NZBA to urgently update its accountability mechanism that will ensure its members are aware of, and will comply with, their obligations.

Paddy McCully, senior analyst at Reclaim Finance, commented: “The NZBA urgently needs to strengthen its guidelines and show that it is prepared to kick out any members that act in bad faith by refusing to adhere to these guidelines. The credibility of the NZBA, GFANZ and the financial sector’s overall commitment to action on climate change will be badly damaged if its member banks are allowed to claim net-zero alignment and then blithely continue to finance the same dirty activities they have in the past.”