Four Canada’s big banks quit global banking alliance of financial institutions aimed at meeting climate goals

Four of Canada’s big banks have quit a global alliance of financial institutions set up to meet climate goals, joining a rush of lenders to do so.

 

Bank of Montreal, National Bank of Canada, Toronto-Dominion Bank and Canadian Imperial Bank of Commerce have left the Net-Zero Banking Alliance, following the largest U.S. banks, which bailed on the organization in recent weeks against a backdrop of legal and antitrust worries.

 

The NZBA members aim for financed emissions reduction targets for 2030, using scenarios that adhere to a long-term global temperature rise of 1.5 degrees above preindustrial levels.

 

In a statement on Friday, BMO spokesman Jeff Roman said that despite its exit from the NZBA, the bank is still committed to meeting its climate targets and helping clients with their decarbonization goals. But he didn’t give a reason for its departure from the group.

 

“We have robust internal capabilities to implement relevant international standards, supporting our climate strategy and meeting regulatory requirements,” Mr. Roman said.

National Bank said it decided to streamline how it reports on plans and progress in light of its mandatory disclosure requirements. The bank will still work with companies “including large emitters and renewable energy providers, to promote impactful decarbonization strategies,” Debby Cordeiro, senior vice-president, communication, public affairs and ESG, said in a statement.

 

CIBC noted the alliance was set up at a time when the banking industry was scaling up its climate efforts. “As this space has evolved and matured, and having made significant progress alongside our clients in these areas, we are now well-positioned to further this work outside of the formal structure of the NZBA,” spokesman Tom Wallis said.

 

TD said it will advance its strategy and advise its clients “as they adapt their businesses and seize new opportunities.”

 

The exodus raises questions about the alliance’s future as an organization designed to marshal massive funds needed for the shift to low-carbon economies. On Monday, its sister organization, the Net Zero Asset Managers initiative, suspended operations after the departure of its largest member, BlackRock Inc. That group said it would assess if it “remains fit for purpose in the new global context.”

 

That includes pushback against environmental, social and governance programs that has intensified with the political shift to the right. With Donald Trump returning to the White House on Monday, companies fear the risks of emphasizing sustainability as Republicans leaders at the state level have sought to ban such measures. Many have cancelled such programs in recent months.

 

As of Friday, Royal Bank of Canada and Bank of Nova Scotia were still listed as NZBA members.

At a conference last week, BMO chief executive officer Darryl White and RBC CEO Dave McKay questioned whether membership in the global alliance was still the best way for institutions to undertake climate-related action. “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,” Mr. McKay told the audience.

 

RBC had no further comment on Friday. The other Canadian institutions were not immediately available to comment on their commitments to the alliance.

 

U.S. banks JP Morgan Chase & Co., Bank of America Corp., Citigroup Inc., Wells Fargo & Co. and Goldman Sachs Group Inc. have quit the NZBA since early December. Each has said its decision did not mean it was abandoning its net-zero goals or efforts to help clients meet their emission-reduction targets.

 

The sector-specific alliances exist under an umbrella called Glasgow Financial Alliance for Net Zero, which was unveiled with fanfare at the United Nations climate summit in 2021 amid excitement over the potential for the might of the finance industry being brought to bear on climate action.

 

Former Bank of Canada and Bank of England governor – and now federal Liberal leadership hopeful – Mark Carney, and Michael Bloomberg, founder of Bloomberg L.P. and former mayor of New York were co-chairs. Mr. Carney resigned that post this week as he announced his bid to become prime minister.

 

 

 

This article was first reported by The Globe and Mail