Canada’s largest banks are reconsidering their involvement in the Net-Zero Banking Alliance (NZBA), as reported by BNN Bloomberg.

The alliance, established to promote climate financing, has recently faced several high-profile departures.

US banks such as Goldman Sachs, Morgan Stanley, Wells Fargo, Bank of America, Citigroup, and JPMorgan Chase have withdrawn, citing increased Republican criticism of ‘woke’ capitalism and doubts about the effectiveness of voluntary measures in reducing greenhouse gas emissions.

Royal Bank of Canada (RBC) and Bank of Montreal (BMO), two of Canada’s biggest lenders, have hinted at a potential shift in their approach.

Speaking at an industry conference in Toronto, RBC CEO Dave McKay stated that leaving the NZBA
“doesn’t lead to a non-commitment to net zero or climate change.”

He explained that such a move would reflect a concern that “maybe that isn’t the right mechanism” for oversight, policy guidance, and reporting rules.

At the same event, BMO CEO Darryl White confirmed the bank remains a member of the NZBA but added, “At least we are today.”

White emphasized BMO’s dual commitment to transitioning toward a low-carbon economy while continuing to support legacy energy clients in Canada. He explained, “We won’t abandon that.”

The NZBA website listed both banks as members as of Wednesday. However, a spokesperson for the alliance declined to comment.

The Canadian Bankers Association also stated that participation in NZBA is an independent decision for each member.

A spokesperson noted that banks in Canada are implementing and reporting on their climate strategies in alignment with domestic regulatory requirements.

Despite their departures from the NZBA, US banks have reaffirmed their net-zero emissions goals and remain committed to helping clients reduce their carbon footprints.

Canadian banks, including RBC, BMO, and Toronto-Dominion Bank, were among the top 10 global financiers of oil, gas, and coal in 2024, according to Bloomberg data.

JPMorgan Chase ranked as the largest provider of fossil fuel financing that year.

Keith Stewart, senior energy strategist at Greenpeace Canada, called for stronger government action, stating, “If we want to avoid ever-more communities burning from climate-fueled wildfires or submerged in record flooding, then governments must regulate the sector to move the money out of fossil fuels and into climate solutions.”

The NZBA departures reflect a broader pattern of exits from voluntary net-zero groups in the finance industry.

In 2023, a similar alliance for insurers experienced significant withdrawals due to Republican litigation threats.

Climate Action 100+, a net-zero investor group, saw defections in 2022, including those of asset management units from Goldman Sachs, JPMorgan Chase, and Pacific Investment Management Co.

That same year, Vanguard Group, the second-largest money manager globally, left another net-zero alliance for asset managers.

Read more @benefitsandpensionsmonitor