Latest news with #Net-ZeroBankingAlliance
Yahoo
29-04-2025
- Business
- Yahoo
Opinion: Bankers send mixed message on net zero
By Gina Pappano The 2025 bank annual general meeting (AGM) season is over. As a bank shareholder and executive director of InvestNow, I presented shareholder proposals to the Big Five Canadian banks. This was my third time doing so. In 2023, I asked them to commit to the Canadian oil and gas sector and rethink 'net zero by 2050.' In 2024, I asked them to study and report on the costs of adhering to net zero by 2050. In both instances, they refused. This year our formal ask of the banks was to quit both the Net-Zero Banking Alliance (NZBA) and the Glasgow Financial Alliance for Net Zero (GFANZ). These are two interrelated, UN-sponsored and, until recently, Mark Carney-led organizations that advocate phasing out the oil and gas industry to achieve net-zero emissions targets. They do this primarily by pressuring financial institutions to cut funding for oil and gas companies and projects. In effect, these organizations' goal is to eliminate one of Canada's most productive and prosperity-generating sectors. Of course, the end of Canadian oil and gas would be bad for bank shareholders and customers, as well as the Canadian economy writ large. It's a goal informed by ideology rather than the interest of the banks themselves or the shareholders to whom they have a fiduciary duty. Which is why, we argued, our banks should not continue down this net-zero path. Now, an odd thing happened this year. The banks announced they were leaving the two net-zero alliances before the AGMs even began. (We clearly under-asked!) Even so, they let us present our proposals, and I'm glad they did. It allowed me both to applaud them for leaving organizations that undermined their business but also to point out that this was just a first step. It's also necessary to leave behind the ideological madness of net zero. Attending the AGMs also gave me a chance to look in on the activist groups, like Investors for Paris Compliance, SHARE, MÉDAC, and For Our Kids, which all presented their own shareholder proposals or asked questions that were ideologically driven and decidedly opposed to oil and gas exploration and production in Canada. At the AGMs of BMO, TD, and RBC, things became personal. Activists named and attacked four directors on the bank boards (three of the four were female, I couldn't help but notice). Why? Entirely because they also sit on the boards of oil and gas and pipeline companies, which the activists claimed constituted a conflict of interest. They called these directors 'fossil-fuel compromised.' This was unprecedented and frankly, worrying. The activists are now targeting duly appointed and approved board members only because of their experience, past or present, in oil and gas. It all brought to mind the controversial Bill S-243 — the 'Climate-Aligned Finance Act' — which would forbid financial institutions from having board members with any kind of connection to oil and gas, even owning stock in companies that work on pipelines, while also requiring companies to have designated board members ideologically committed to the destruction of the oil and gas industry. (It's worth noting that Mark Carney testified before the Senate in favour of the bill last year.) At times the remarks of the bank CEOs themselves gave hope they were done with being pushed around by the activists and ideologues and were ready to change their tune on oil and gas. The phrase, 'Canada can and must feed and fuel the growing world' came up at two different AGMs, among other encouraging statements, such as 'the world wants what Canada can provide in great abundance. Canada can be a leader in sectors like energy, agriculture, critical minerals, advanced manufacturing and technology.' 'Canada needs a growth-first agenda.' 'Canada has an unprecedented opportunity to build a better and more prosperous future.' All of which is true. But any hope that common sense is being restored in banking faded when, during question-and-answer sessions, these same CEOs trotted out tired old phrases about their commitment to 'net zero, decarbonization, and the energy transition.' There was thus a huge disconnect between the prepared remarks with which they opened and their answers to questions. Which path they'll take moving forward is not clear. Do they support unleashing Canada's economic potential and building a prosperity-driven economy for all, or do they side with the activists in supporting a rapid phaseout of the backbone of our economy? Bjorn Lomborg: Net zero's cost-benefit ratio is crazy high Bjorn Lomborg: Don't double-down on net zero again Despite this year's success we at InvestNow clearly still have a lot of work to do. Now more than ever, our financial institutions need to be reminded to whom they are responsible. Hint: The answer is not our environmentalist activist class. It's their shareholders, first and foremost, and ultimately to Canada. Rest assured, we won't let them forget it. Gina Pappano is executive director of InvestNow. Sign in to access your portfolio
Yahoo
16-04-2025
- Business
- Yahoo
NZBA scraps requirement for banks to strictly target a 1.5°C warming scenario
This story was originally published on ESG Dive. To receive daily news and insights, subscribe to our free daily ESG Dive newsletter. The United Nations-backed Net-Zero Banking Alliance released updated guidelines for how banks should set climate targets Tuesday, lowering the requisite ambition for financial institutions that are members of the group. The guidance released April 15 requires signatories of the climate group to align their targets with limiting global warming 'to well below 2 [degrees Celsius], striving for 1.5°C.' This marks a departure from previous guidance requiring portfolio alignment with a 1.5°C warming scenario and comes after six of the largest U.S. banks left the group between late December and early January. The guidance puts the UN-backed industry group's guidance at odds with that of the Science Based Targets initiative, which called on banks to align targets with a 1.5 degree warming scenario in its Financial Institution Net-Zero Standard. SBTi also maintained the target in the draft of its updated Corporate Net-Zero Standard. This week's update represents the third version of NZBA's standards, which were also revised in March 2024. The weakened target comes a year after the UN-backed banking alliance stated that banks should commit to net-zero by 2050 and set 'intermediate 2030 sectoral targets in line with the latest science using low or no overshoot 1.5°C scenarios' in the second version of the guidelines. The latest version of the alliance's guidance says banks' 'targets should align with the goals of the Paris Agreement' — targeting temperature rise well below 2 degrees — and 'be science-based and support the global transition to a net-zero economy.' The ambition section of the guidance adds that 'banks should also consider policy at the regional and national levels.' 'Achieving the objectives of the Paris Agreement and limiting global temperature increases to well-below 2°C, striving for 1.5°C, will require ambitious actions from all strands of the economy,' NZBA said in the summary. 'The window for action is small,' the organization added. 'The consensus of climate scientists is that global warming must be limited to 1.5°C above the preindustrial average by the end of the century to avoid the worst impacts of climate change.' The UN-backed climate organization recommends that banks "individually and independently' set and disclose near- and long-term targets that support reaching net-zero emissions in line with the Paris Agreement. Additionally, NZBA recommends that banks set emissions baselines and annually report and measure the emissions from their lending, investment and capital markets portfolios; 'use widely accepted climate-based decarbonization scenarios' for target setting; and regularly review their targets 'to ensure consistency with current climate science.' On the final point, NZBA recommends that banks review their targets at least every five years to ensure they align with the latest reports and assessments from the Intergovernmental Panel on Climate Change. The guidance change comes after Goldman Sachs, Wells Fargo, Bank of America, Citigroup, Morgan Stanley and JPMorgan Chase left the UN-aligned group in rapid succession. Some of the banks have dodged state-level probes from Republican state attorneys general in the wake of their exits and other climate retreats. The lack of requiring a strict 1.5°C portfolio alignment does not come as a surprise, as reports that the banking alliance was considering ditching the goal have trickled out since late February. A member of NZBA's steering group confirmed that the organization would vote on axing the requirement earlier this month. The reception of the updated guidance has been mixed, and one bank announced their departure Tuesday after the formalization of the loosened standards. Morningstar DBRS, the financial institution's global credit rating agency, said in March it did not view the change 'as material from a credit perspective,' following initial reports of the considered change. 'It would be a pragmatic move, given the slow pace of transition we have seen, but it would also remain an ambitious target because it would still mean that we are on path for an orderly transition towards net zero, which implies lower transition costs compared to an abrupt or disorderly transition,' the analysts wrote last month. 'Based on climate models, a potential new NZBA pledge has no consequence on physical risk in the next decade.' However, some climate and sustainable finance groups have been opposed to the lowered ambitions of the updated guidance since reports of its consideration began to come out. Those views were reinforced following Tuesday's update by a mix of sustainable investment groups, nonprofits and banks. Netherlands-based Triodos Bank announced it was departing NZBA Tuesday and explicitly blamed the lowered ambitions of the new guidelines for its departure. The bank said that though there were improvements made from draft updates that were circulated, 'the new guidelines fall short of the needed urgency to align loans and investments portfolios with the 1.5 degrees Celsius global warming scenario.' 'The disturbing reality that the world is not on track for 1.5°C should not be taken as a reason to give up on trying to meet the target, but a flashing red light on the need to double down on efforts to cut emissions,' sustainable finance nonprofit Reclaim Finance said after the steering committee member confirmed the vote. 'Every 0.1 of a degree matters and the higher global temperatures get, the harder it will be to deal with these impacts, and the greater the financial risks for banks and their investors,' responsible investment group Share Action's Co-Director of Corporate Engagement Jeanne Martin said on Tuesday. Recommended Reading Why climate alliance memberships are no longer 'en vogue' for Wall Street
Bloomberg
25-03-2025
- Business
- Bloomberg
Norinchukin Becomes Latest Big Japan Bank to Quit Climate Group
Norinchukin Bank left the banking industry's largest climate alliance, walking away from a group that's already been abandoned by US and Canadian heavyweight lenders. The Japanese agricultural bank has withdrawn from the Net-Zero Banking Alliance, a spokesperson said on Tuesday, confirming an earlier report by the Nikkei newspaper. Norinchukin remains committed to net-zero efforts to address climate change issues, the spokesperson added.
Reuters
20-03-2025
- Business
- Reuters
New Zealand probes banks' climate commitments for anti-cartel behaviour
WELLINGTON, March 21 (Reuters) - New Zealand has opened an investigation to determine if commitments by lenders under the Net-Zero Banking Alliance could breach anti-cartel regulations, the country's competition watchdog said. The Commerce Commission said in an email on Friday that it had opened an investigation to determine whether the adoption and alleged alignment of net-zero strategies and targets by banks could breach section 30 of New Zealand's Commerce Act. Section 30 prohibits contracts, arrangements, understandings or covenants containing cartel provisions. "We are continuing to obtain information from relevant parties to determine whether there is conduct that breaches the Act," the statement said. Farm lobbying group Federate Farmers in December asked the Commerce Commission to look at whether the banks' commitment to the Net-Zero Banking Alliance had resulted in anti-competitive behaviour. An email sent by Federated Farmers to the head of the Commerce Commission said the alliance "risks creating co-ordinated lending practices that disadvantage high-emission sectors such as agriculture, transport and mining." Along with government-owned Kiwibank, New Zealand's banking system is dominated by four large Australian banks: Westpac Banking ( opens new tab, Commonwealth Bank of Australia-owned ASB Bank ( opens new tab, National Australia Bank's Bank of New Zealand ( opens new tab and ANZ Group ( opens new tab. New Zealand's Banking Association and the five banks did not respond immediately to requests for comment on the Commerce Commission probe.
Japan Times
20-03-2025
- Business
- Japan Times
MUFG leaves climate group as Japanese banks join Wall Street exits
Mitsubishi UFJ Financial Group quit the banking industry's largest climate alliance, joining domestic peers in walking away from a group abandoned by U.S. and Canadian heavyweights. Japan's biggest lender has withdrawn from the Net-Zero Banking Alliance (NZBA), a spokesperson said Wednesday, confirming an earlier Bloomberg News report. MUFG will continue to work diligently on addressing climate change, the bank said. MUFG follows Tokyo-based rivals Nomura Holdings and Sumitomo Mitsui Financial Group in leaving the climate group. The latest exits have emerged after a wave of NZBA defections since December by the largest banks in the U.S. and Canada, including JPMorgan Chase & Co., Bank of America and Royal Bank of Canada. Since U.S. President Donald Trump won back the White House in the Nov. 5 election, U.S. finance firms have been seeking to adjust to a new reality in which environmental policies are ripped up and lambasted. That has since spilled out beyond U.S. borders, forcing lenders in other nations to consider their approach to global warming. NZBA was convened by the United Nations and once represented over 40% of global banking assets. The group is currently consulting members on a drastic overhaul that would see it remove a requirement for signatories to align their portfolios with a goal of limiting global warming to 1.5 degrees Celsius. "The focus of the Net-Zero Banking Alliance remains to support members' efforts to finance the transition to a net zero emissions economy,' a spokesperson for the group said in a statement. An ongoing strategic review will allow the NZBA to continue to "adjust to changing conditions,' the spokesperson said. MUFG was one of 11 member banks on the NZBA's steering group, which oversees the alliance's strategy and came up with the new proposed direction for the group. Bank of America and Citigroup were among the original companies on the steering group.
