(Bloomberg) – Most banks in the industry’s largest climate alliance endorsed a proposal that would focus on providing financial support for the energy transition and signatories to sign strict standards for emissions enabled by loans.
Shargiil Bashir, chairman of the Zero Bank Alliance Guidance Group, said in an interview that “well above” two-thirds of members voted to implement a new strategy, with more than 90% supporting new directions. Although he refused to break down by region or disclose how specific banks voted, Bashir said the plan “has supported by about 130 members”.
The vote on confidence in the NZBA has been turbulent in the group’s months. According to its website, the alliance’s asset base once accounted for more than 40% of global bank assets, but since early December, the alliance’s asset base has been about one-third, about $27 trillion.
Originally it was Wall Street’s Exodus, with Bank of America, including Goldman Sachs Group Inc., leaving the NZBA, a bigger strike, with Canada and Japan’s largest lenders also exiting the league.
The next phase of the NZBA is “going from a very important direction, which is the direction set by the net zero goal,” said Bashir, who is also the chief sustainability officer of Abu Dhabi Bank. This means “unlocking opportunities for support and funding transitions,” he said.
The new approach aims to provide members with greater flexibility. According to briefing documents shared by NZBA with its members, such as the requirement for setting five-year targets to reduce funding emissions from the high-carbon sector. Additionally, the prior mission of signatories to align their portfolios will eliminate the purpose of limiting global warming to 1.5C.
The NZBA previously asked members to transition all greenhouse gases from their loans and portfolios to “align with the net pathway for 2050”, the latest “align with the net zero pathway” and “align with the maximum temperature rise of 2100. According to the briefing paper, “the ambitions of the framework will be expanded”, including all zero-net avenues consistent with the Paris Agreement temperature targets, including ranges designed to be “under 2C”.
At the current rate of decarbonization, the United Nations warns that the world is approaching 3C warming. In this case, it is particularly noteworthy that more than 100 banks have set a sectoral emission reduction target of 1.5°C.
He said greater flexibility is still needed because the rate of decarbonization varies greatly across countries and industries.
NZBA’s new look will focus more on helping its members support customers in the low-carbon transition. The briefing document shows that it will also provide issues regarding emission avoidance and identify and develop strategies to address certain barriers to green technology financing.
“We need all sectors including banks and finance to work towards reducing emissions in half of our critical decade of climate action,” Bashir said.
The largest European banks, including BNP Paribas SA, HSBC Holdings and UBS Group AG, are members of NZBA, as are Barclays, Deutsche Bank AG and standard charter flights.
A spokesman for the KMT, HSBC and Stanchart declined to comment on whether they endorsed the NZBA’s proposal, while other banks did not respond to requests for comment.
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