What is the Net Zero Banking Alliance?
The Net Zero Banking Alliance, a groundbreaking initiative in the realm of sustainable finance, unites leading banks globally in a collective commitment to achieving net-zero emissions by 2050. Launched under the auspices of the United Nations Environment Programme Finance Initiative (UNEP FI), this alliance represents a pivotal step in aligning the banking sector with global climate goals. Participating banks commit to robust climate action, including setting interim targets, developing transparent strategies, and disclosing progress. The Net Zero Banking Alliance is part of the broader Glasgow Financial Alliance for Net Zero.
What are the goals of the alliance?
The main goals of the NZBA include:
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Driving credible progress toward a Net Zero Global Economy by 2050.
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Providing a standardised understanding of what it means to be aligned with 1.5 C and net zero goals.
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Showcasing approaches as to how to implement the commitments among member financial institutions.
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Signposting methodologies, resources and best practices around areas key areas such as data management.
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Encouraging new banks to join the alliance.
What is the Glasgow Financial Alliance for Net Zero?
GFANZ is a global coalition of eight independent net-zero financial alliances whose members have committed to support the transition to net zero by 2050 and help achieve the objectives of the Paris Agreement. Members consist of Banks, Insurers, Asset owners, Asset managers, financial service providers, and investment consultants. GFANZ supports efforts to translate net zero pledges into actionable, science based plans pushing for consistency and accountability among financial institutions.
GFANZ seeks to increase the number of firms with net-zero commitments within the financial sector and ensure that such institutions are empowered to achieve their own net zero goals independently. GFANZ is to act as a forum across sectors to promote best practices and develop voluntary approaches while also encouraging firms to set commitments that are backed by targets and transition plans. This allows policy makers and alliance members within public and private sectors to mutually support the goals of the Paris Agreement.
What is the Race to Zero?
The Race to Zero, initiated in 2020, is a pivotal global campaign under the guidance of the United Nations Framework Convention on Climate Change (UNFCCC), compelling businesses, cities, regions, and investors to unite in the commitment to halve global emissions by 2030 and achieve a net-zero economy by 2050. A prerequisite for institutions joining one of the GFANZ alliances – including the Net Zero Banking Alliance – is adherence to the minimum criteria set by the Race to Zero. This alignment demands a stringent commitment, including a clear pledge to attain net-zero emissions by 2050, establishment of an interim target for 2030, delineation of the necessary actions for goal achievement, and an unwavering commitment to transparently report on the progress against these ambitious targets.
How can banks comply with the Net Zero Banking Alliance?
Complying with the Net Zero Banking Alliance (NZBA) involves a multifaceted commitment for banks, ensuring their alignment with global efforts for a net zero future:
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Emission Transition: Banks need to align operational and financed emissions from their lending and investment portfolios with net-zero pathways by 2050.
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Strategic Target Setting: Within 18 months of joining, banks must set 2030 targets (or sooner) focusing on priority sectors, with intermediary goals every 5 years from 2030 onwards. 2050 targets are also to be established.
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Transparency and Reporting: Banks must annually publish absolute emissions and emissions intensity. They must also disclose progress against a board-reviewed transition strategy and adhere to best practices.
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Offsets in Transition Plans: A robust approach to the role of offsets is expected, acknowledging their place in the broader transition strategy.
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Engagement and Leadership: Active participation in the annual meeting ensures banks contribute to upcoming actions and take leadership roles within envisioned work tracks.
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Financial Commitment: Agreeing to annual fees supports essential programs and work tracks, ensuring the alliance's sustained effectiveness.
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Public Disclosure: Banks commit to publicly report emissions profiles, net-zero targets, plans, and progress. The Secretariat collates collective reporting using banks’ annual public reports.
Note: While the NZBA does not establish legally binding partnerships, it encourages commitment, transparency, and collaboration among its members.
How Sweep can help
Sweep enables you to take the lead on your decarbonization strategy, and support the transition to a net zero economy.
Using our platform you can easily set targets at different levels: for portfolio companies, funds, or entities, and cascade the fund temperature alignment back to them. The network approach is key to collaborative reduction.
Reach out today to find out more.
