The Net-Zero Banking Alliance (NZBA), a member-based organisation committed to helping banks address the effects of climate change and associated economic impact, has ‘initiated a member vote to decide on a proposed transition from a membership-based alliance to establishing its guidance as a new framework initiative’. This follows the decision by every large bank member in the US and Canada, and several others outside North America, to leave the organisation, with most departing between late 2024 and mid-2025.
However, while the departures could be seen as a ‘levelling out’ of industry enthusiasm, with the idea that sustainability is now past the ‘hype cycle’, adoption of sustainable practices is still progressing within financial services.
120 institutions remain in the NZBA, including six in the US and Puerto Rico and two in Canada, plus many throughout Europe, Asia, and other continents. For those still in the group, the commitment continues.
In addition to economic factors, changing politics have contributed to a shift in priorities. One of the challenges is that sustainability measures need to prove themselves, ie. demonstrate measurable returns on investment, just like any other project or investment. Investors want higher profits, delivered now rather than later. While the fossil fuel industry delivered higher returns than anyone expected, the renewable energy transition isn’t happening as quickly as predicted.
The apparent ‘cooling’ of big bank support for climate mitigation and other environmental causes doesn’t mean that the problems of climate change are going away. There is still a need to try to reduce the severity of climate change and to prepare for when it happens.
Mounting climate change-related insurance concerns and costs for homeowners and businesses, curtailed supply chains, and lost access to power or water resources, are just a few of the growing number of delayed or denied impacts that will eventually burst right through the business and consumer world.
One view is that the topic of sustainability is moving from being completely consumer-facing – something of ‘a PR play’ – to being something that’s more about real risk and resilience.
Organisations both in and outside the financial services industry continue to focus significant staff involvement and product development efforts on achieving lower carbon emission levels and creating long-term, more environmentally aware and cyclical business models to help shape a more resilient future.
