The Net-Zero Banking Alliance announcement that it will not adopt strengthened accountability standards to require banks to phase out fossil fuel-financing undermines global efforts to put the world on a 1.5˚C-compatible pathway and the capacity of banks’ clients to achieve their own net-zero goals.

The NZBA’s decision is at odds with its own mission as a member of the Glasgow Financial Alliance for Net-Zero (GFANZ) to “ensure high levels of ambition are met with credible action”. It is also at odds with the scientific foundations on which banks’ net-zero commitments were made, the achievement of which is impossible without urgent reductions in fossil fuel-financing and an immediate end to all new fossil fuel development.

By freeing its members from accountability to science, the NZBA has undermined its own value to the global climate effort and removed all assurance that banks will do their part to achieve a net-zero world. 

The conciliatory behavior of NZBA and GFANZ, driven by backsliding from Wall Street and other large banks, notably JPMorgan Chase, Morgan Stanley, and Bank of America, makes it clear that the efficacy of voluntary alliances is limited and that holding  banks accountable to the Paris Agreement requires higher levels of binding regulation and consumer engagement. Bank clients must use the mechanisms available to them to demonstrate repercussions for banks that back away from their net zero commitments and jeopardize the deposits and sustainability plans of their clients. These levers include accelerating the movement of assets out of these banks and using shareholder power to vote on resolutions to advance climate action and to remove board directors responsible for bank backsliding.

BankFWD and its network of clients with NZBA banks call on individual banks to produce science-aligned plans to achieve net-zero targets and phase out the fossil fuel financing policies that undermine them.