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The bank’s top Global Climate Union calls on members, including HSBC and Barclays, to vote to abandon their pledge that 54TN assets are intended to limit global warming to 1.5C.
The Net Zero Banking Alliance’s efforts to retain the rest of the members follow the departure of many major US banks since Donald Trump was elected as president.
Many financial institutions that set net zero targets are backtracked, claiming that they cannot decarbonise their lending and transaction books faster than the faster economy. The original spirit of the group, launched by the Envoymark Kearney at the time, was to allow for lower emissions through fundraising activities.
Already under pressure from US Republican politicians, the group lost 14 top US members and left 134 members after Trump’s election, including JPMorgan Chase and the US Bank. According to Sweden’s SBAB, only one bank has been participating since early December.
Unless the NZBA softens the rules, a group of European banks that make up the heaviest hitters of the year threatened to withdraw earlier this year, the Financial Times reports.
The proposal to relax membership requirements was expected to be shared with members on Tuesday ahead of the voting process that will begin later this month, and the two people are familiar with it.
It was a “very depressing” response to the slow pace of energy transitions, people said.
The move follows two days of consultations between leadership in London later last month to plot the alliance’s future after months of consultation, a member of the banker said.
Currently, banks need to reduce their funding-related carbon emissions to net zero by 2050 and commit to matching the global scenario where long-term average temperature rises are limited to 1.5C from pre-industrial levels.
Under the new proposal, members are committed to adjusting their activities with a less troublesome goal: to maintain warming “a far below 2C” and pursuing efforts to maintain it at 1.5C.
The world violated 1.5c warming for the first time last year, but this is not a violation of the Paris Agreement, which has been measured for over 20 years.
It has heightened fear among scientists that climate change is accelerating faster than expected. The United Nations predicts that by the end of the century the world will be on track due to 2.9c warming.
The banking sector’s response has gained momentum under the GFANZ Glasgow Financial Alliance in 2021, but is part of a wider shaking in the financial sector alliance, which is under political attack.
A similar alliance of asset managers in January stopped working after heavyweight members, including BlackRock, fell apart two years ago with insurance industry alliances.
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James Vaccaro, senior associate at the Cambridge Institute for Sustainability Leadership, said the NZBA proposal was a “realistic reflection” for the bank. He said it could be easier for Asian banks who struggled to meet the rule “allowing more momentum despite backtracking in North America.”
Under the proposal, the group can focus on helping members build the technical expertise needed to publish carbon accounts and migration plans, as well as helping them engage in government policies regarding climate action.
Apart from the alliance, the banks are redrawing their climate plans and reshuffling top executives. Morgan Stanley said last year that the lending target would reflect a world that warms up to 1.7c, rather than 1.5c. HSBC said it could rethink its own funded emissions targets later this year, and Wells Fargo dropped its target of achieving net zero loan emissions by 2050.
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