Global Coalition Calls on Banks to Raise the Bar on Net Zero

A global coalition of advocacy nonprofits including ShareAction, BankTrack, Reclaim Finance, and the Sierra Club have written to the UN Environment Programme Finance Initiative (UNEP-FI) and the Net Zero Banking Alliance (NZBA) steering committee, urging NZBA members to restrict their financing of fossil fuel projects, including coal, in order to align with the recently strengthened Race to Zero criteria. Read the letter here.

The UN-backed Race to Zero campaign, of which the NZBA is a partner, updated its criteria for members in June. The seven net zero alliances under the Glasgow Financial Alliance for Net Zero (GFANZ) umbrella are required to meet the updated minimum criteria by June 2023.

"The updated Race to Zero criteria were a major step forward, and affirmed what has been obvious for years: in order for financial institutions' net-zero commitments to be credible, they must explicitly commit to phase out financing for new fossil fuels. Now, NZBA leadership must get serious about upholding these criteria and enforcing compliance among members. It's time for the NZBA to make clear that banks who continue to finance massive fossil fuel expansion, while making grand pronouncements about climate goals, are not welcome in the alliance," said Adele Shraiman, Campaign Representative in the Sierra Club's Fossil-Free Finance campaign.

The 16 nonprofits are extremely concerned by reports that a UNEP-FI's spokesperson said it is unlikely that individual alliances will need to update their core commitments to meet Race to Zero’s new rules. The nonprofits warn that this undermines the credibility of UNEP-FI role as convener of three of the GFANZ member alliances and its net zero commitment.

In the letter, the coalition asked the NZBA to urgently respond by outlining the timeline and process for updating its guidelines to maintain its accreditation, as well as the accountability mechanism that will ensure its members are aware of and will comply with their obligations. The coalition urged the NZBA to go beyond the UN’s minimum ‘Starting Line’ criteria by also playing a proactive leadership role, such as explaining how they will support climate-affected communities to ensure a fair transition.

The NZBA plans to review its guidelines by April 2024. The nonprofits called for this to be brought forward so that members can adjust their policies in time for the June 2023 deadline.

QUOTES FROM COALITION MEMBERS

“With 115 member banks representing almost 40 per cent of global banking assets, the NZBA has a key role to play in limiting global warming to a 1.5C world. It is vital that the alliance updates its guidelines in line with the strengthened Race to Zero criteria to ensure member banks act with the ambition needed to address the climate crisis,” said Kelly Shields, Senior Campaign Officer at ShareAction.

“The new Race to Zero criteria leave no doubt that reaching net zero means ending our reliance on, and the financing of, fossil fuels as soon as possible, starting with coal. It is embarrassing, and ultimately fatal for the credibility of the NZBA if it does not now strengthen its membership criteria accordingly, right when the world is facing one climate disaster after another. Joining the alliance was always going to be about this: stop financing fossil fuels,” said Johan Frijns, Executive Director at BankTrack.

“The NZBA urgently needs to strengthen its guidelines and show that it is prepared to kick out any members which act in bad faith by refusing to adhere to these guidelines. The credibility of the NZBA, GFANZ and the financial sector’s overall commitment to action on climate change will be badly damaged if its member banks are allowed to claim net zero alignment and then blithely continue to finance the same dirty activities they have in the past,” said Paddy McCully, Senior Analyst at Reclaim Finance.

NOTES TO EDITORS

The letter can be found in full here. The letter was sent to Eric Usher — the head of the UNEP-FI, due to the UNEP-FI's role as the convener of the NZBA — and the steering committee of the NZBA, which includes representatives from 12 member banks including HSBC, Morgan Stanley, Bank of America, Citi, and Standard Chartered, who are currently chair.

Further detail around the Race to Zero ‘Starting line’ criteria and ‘Leadership practices’ can be found here.

The full list of co-signers is as follows:

• AbibiNsroma Foundation, Ghana
• AnsvarligFremtid, Denmark
• Bank on our Future, UK & United States
• BankTrack, The Netherlands
• Climate Safe Lending Network, US
• Environmental Defence, Canada
• Fair Finance International
• Global Witness, UK
• Make My Money Matter, UK
• Reclaim Finance, France
• ReCommon, Italy
• ShareAction, UK
• Sierra Club, United States
• Stand.earth, Canada and United States
• Talanoa Institute, Brasil
• 350.org, Japan