43 Banks launch net-zero banking alliance as key part of consolidated Glasgow Cop Climate Action

On 21 March, the eve of President Biden’s Head of State Climate Summit, Mark Carney (the UK Prime Minister’s Finance Advisor for COP26 and UN Special Envoy for Climate Action and Finance) launched a global alliance that brings together existing and new net-zero finance initiatives into one sector-wide strategic forum: The Glasgow Financial Alliance for Net Zero (GFANZ). Also, UNEP FI brings together 43 of the world’s leading banks to form the UN-convened Net-Zero Banking Alliance. The new banking initiative becomes a founding member of the GFANZ alongside the pioneering UN-convened Net-Zero Asset Owner Alliance.

Ahead of the UN Climate Conference (COP26), GFANZ will work to mobilize the trillions of dollars necessary to build a global zero emissions economy and deliver on the goals of the Paris Agreement. The new alliance will provide a forum for strategic coordination for the leaders of financial institutions from across the finance sector, to accelerate the transition to a net-zero economy. Convened in partnership with the UNFCCC Climate Action Champions and the Race to Zero campaign, and the COP26 Presidency, the initiative launches at an event that sees finance industry participants join the Honorable John Kerry, US Special Presidential Envoy for Climate and the Honorable Janet Yellen, US Treasury Secretary.

All initiatives in GFANZ require signatories to set science-based, interim, and long-term goals to reach net-zero no later than 2050 in line with Race to Zero’s criteria. These goals are supplemented by member-determined short-term targets and action plans.

The industry-led Net-Zero Banking Alliance (NZBA), hosted by the United Nations Environment Programme Finance Initiative (UNEP FI) and co-launched with the Financial Services Taskforce (FSTF) of the Prince of Wales’ Sustainable Markets Initiative (SMI), is the newest net-zero alliance. NZBA brings 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, rigor, and transparency.

The NZBA joins three existing initiatives: the UN-convened Net-Zero Asset Owner Alliance (convened jointly by UNEP FI and the Principles for Responsible Investment), the Net Zero Asset Managers Initiative, and the Paris Aligned Investor Initiative.

The UN-convened Net-Zero Asset Owner Alliance’s 37 members with over $5.7 trillion assets under management are demonstrating strong early leadership by already setting science-aligned targets for 2025.

These alliances will shortly be joined by some of the world’s leading insurers and reinsurers in the soon-to-be-launched UN-convened Net-Zero Insurance Alliance (NZIA).

By bringing together leading existing and new net-zero finance initiatives in the Race to Zero together in one sector-wide strategic forum, GFANZ will catalyze strategic and technical coordination on the steps firms need to take to align with a net-zero future.

Bringing in global banks

The industry-led Net-Zero Banking Alliance (NZBA), convened by UNEP FI, brings together 43 banks from around the world in recognition of the vital role of banks in supporting the global transition of the real economy to net-zero emissions.

The Net-zero Banking Alliance has been accredited by the UN Race to Zero’s Expert Peer Review Group. Find the full list of participating banks here:

All banks that have signed the commitment will:

• 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 5 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 decarbonization, 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 UN-Convened Net-Zero Banking Alliance will deliver internationally consistent guidelines and a global community, with local implementation also supported by country chapters, the first of which will be established by the UK Bankers for Net-Zero.

The commitment is underpinned by the bank-led UNEP FI Guidelines for Climate Target Setting for Banks, also launched. These guidelines have been developed by banks from the Collective Commitment to Climate Action, a leadership group under the UNEP FI Principles for Responsible Banking.