Net-Zero Banking Alliance Dissolves After Member Withdrawals
The Net-Zero Banking Alliance, established in 2021 under the UN Environment Programme Finance Initiative (UNEP FI), is set to dissolve. The alliance, which aimed to align banking portfolios with a net-zero pathway by 2050, has faced a wave of withdrawals and a softening of its stance.
Initially, the alliance had nearly 150 members covering over 40% of global banking assets. However, geopolitical shifts, regulatory uncertainty, and energy security concerns led to an acceleration in withdrawals over the past year. Six major US banks, including JPMorgan Chase and Bank of America, left the alliance after Donald Trump's election, citing legal and political risks. More recently, nearly 150 banks voted to dissolve the group.
In response to these developments, the alliance has made changes to its structure. It will replace its coalition structure with a resource hub, and its guidance on climate target-setting will remain available but without enforcement or accountability mechanisms. The 'Guidance for Climate Target Setting for Banks' will still be accessible, but without monitoring or enforcement. Despite the dissolution, the UN-supported alliance continues to exist and has not ceased operations.
The Net-Zero Banking Alliance's dissolution is a significant shift in the global effort to combat climate change. While the alliance's guidance will remain available, the loss of enforcement and accountability mechanisms may impact its effectiveness. The alliance's future as a resource hub remains to be seen, but its legacy as a coalition of banks committed to net-zero goals has come to an end.
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