Origins and Promise: The NZBA’s Global Push toward Net-Zero
In April 2021, as part of a broader push to align financial activity with climate goals, former U.N. special envoy for climate action and finance Mark Carney helped found the Net-Zero Banking Alliance (NZBA). The coalition brought together 63 banks from 32 countries, collectively managing about US$40 trillion in assets, with the aim of steering lending toward net-zero emissions. Canada’s banking scene joined the effort later that year, signaling a shared willingness among lenders to translate climate commitments into concrete lending standards.
Canada’s participation began with Vancouver City Savings Credit Union and expanded to include major banks such as Royal Bank of Canada, Toronto-Dominion Bank, Scotiabank, Bank of Montreal, Canadian Imperial Bank of Commerce and National Bank of Canada. The NZBA published more than a dozen guidance documents and reports designed to help banks craft climate-related business strategies and establish sector-specific net-zero targets, contributing to a broader narrative that banks could, and should, align profit with planet.
The Exodus: Why Members Left
Despite early momentum, the alliance faced a rapid, global backlash in the politics of climate policy. Following a shift in U.S. leadership and widening political pressure from Republican lawmakers, several American members retreated from the NZBA in late 2024. The exodus extended into Canada, where the nation’s largest lenders also departed in the months that followed. The alliance’s footprint shrank as banks recalibrated how they set, report and enforce climate commitments in an era of intensifying scrutiny over climate-related initiatives.
Compounding the shift, NZBA’s sister network for asset managers—NZAMI—saw a similar pause. After its largest member, BlackRock, stepped back, NZAMI suspended operations in January, underscoring how intertwined governance and market sentiment are in climate finance collaborations.
Leadership Reactions: What Bank Executives Said
Even as the NZBA disbanded, some executives signaled that climate ambition would persist, albeit outside the alliance’s framework. At a January conference, RBC Chief Executive Dave McKay suggested that leaving the NZBA did not imply abandoning net-zero goals; rather, the organization might no longer be the optimal mechanism for achieving them. “If our countries have an objective to get to a certain point, we will be part of that, and therefore pulling out of NZBA hypothetically doesn’t lead to non-commitment to net-zero climate change,” he said, acknowledging the ultimate aim remains intact.
Similarly, Bank of Montreal CEO Darryl White emphasized continuing climate transition efforts while highlighting the bank’s duty to its Canadian energy customers. “We also have a commitment, particularly here in Canada, to our legacy energy customers, and we will not abandon that,” he stated, framing the bank’s path as a balance between climate targets and client obligations. Both comments reflect a broader shift from governance by a single coalition to a more diversified, perhaps fragmented, approach to climate accountability.
What the Shutdown Means for Net-Zero Banking
The NZBA’s demise marks a turning point in climate finance governance. With a once-prominent coalition dissolved, the industry faces the challenge of identifying new structures that can credibly guide net-zero lending. Regulators, investors and lenders may now rely more on internal risk frameworks, country-level policies, and sector-specific guidelines rather than a single, global standard governing multiple lenders. The absence of a unifying international mechanism could slow convergence but may also spur more tailored, jurisdiction-specific measures that better fit national contexts.
Canada’s Policy Crossroads: From Coalition to Policy
Canada’s climate policy landscape has long wrestled with balancing ambitious emission goals and the realities of a diversified economy. The NZBA’s exit underscores the difficulty of sustaining cross-border forums amid political shifts and domestic policy constraints. Some observers argue Canada may need stronger domestic mechanisms to drive alignment between banks and climate policy, while others caution against over-reliance on voluntary commitments alone. The broader takeaway is that credible progress in climate finance may increasingly hinge on transparent governance, enforceable reporting, and policy coherence at the national level.
Looking Forward: The Path Ahead for Climate Finance
Marc Carney’s legacy in mobilizing financial institutions toward net-zero remains influential, even as the formal NZBA framework dissolves. The market’s appetite for credible climate risk management and sustainable lending is unlikely to vanish; it may simply take new shapes—whether through emerging coalitions, regulator-led expectations, or market-driven standards that evolve faster than any single alliance. What matters is that banks continue to translate climate commitments into concrete lending practices, transparent reporting, and measurable outcomes that can withstand political and economic headwinds.
