The Net-Zero Banking Alliance has responded to criticism by climate groups that the activities of its members are inconsistent with its policies. It says many of its members have only started their “decarbonisation journey”.

The UN-convened NZBA was launched in April last year and now has 100 member banks, representing a claimed 40 per cent of global banking assets, that have given a commitment to align their lending and investment portfolios with net-zero emissions by 2050.

Australian members banks are ANZ, Commonwealth Bank and Macquarie Group.

Climate and shareholder activist groups ShareAction, Urgewald, Reclaim Finance and others have produced research that shows evidence of financing that appears inconsistent with a net-zero future.

NZBA acknowledged these findings, saying many of its members are “mere months into their decarbonisation journey and are still laying the groundwork for an orderly transition. Claims of breach of the commitment are, in our opinion, premature.”

It said member banks are obliged to set and implement decarbonisation targets in accordance with its guidelines.

Currently, the guidelines require banks to set 2030 and 2050 net-zero targets that align with no/low-overshoot 1.5°C transition pathways, as specified by credible science-based climate scenarios.

On the question of coal and other fossil fuel financing, NZBA said it does not support the financing of fossil fuel expansion. 

“However, the Alliance encourages members to conduct client engagement and education as the primary tool for engendering real-economy impact. To achieve targets, banks will need to engage with clients, shareholders and within their own firms to educate, share priorities, gain alignment and assess operations.

“Banks will ideally supplement targets with sector policies that broadly support clients’ transition.

“The NZBA does not plan to dictate how members choose to set policy or engage staff and clients in their net-zero transition but will support them with best practices and sector guidance.”