The Net-Zero Banking Alliance has urged member organisations to accelerate the development of their emissions targeting, saying banks have set targets for an average of less than three of the nine climate-intensive sectors listed in its guidelines.
The NZBA used the 2022 United Nations Climate Change Conference (COP27) as an occasion to issue its first progress report since it was launched in April last year.
The NZBA said banks taking action on net-zero emissions targets have focused on a small group of high-emitting industries in their initial target statements, particularly oil and gas, commercial real estate and power generation.
“It is unlikely that this small number of sectors covers the significant majority of emissions. As part of the commitment, action must be accelerated to ensure intermediate targets are set within 36 months of joining [the NZBA] which cover all, or a substantial majority, of bank attributable emissions across all sectors,” it said.
The nine climate-intensive sectors are agriculture, aluminium, cement, coal, iron and steel, commercial and residential real estate, oil and gas, power generation and transport.
Industries that need attention from more member banks include agriculture (only three banks have set targets), aluminium (three banks have set targets) and iron and steel (11 banks).
Only eight banks reported having set emissions reduction targets for the coal industry but 55 banks have phase-out strategies.
From the original 43 founding members the NZBA membership has grown to 122 banks from 41 counties, representing an estimated 40 per cent of global banking assets. Australian members include ANZ, Commonwealth Bank, NAB, Macquarie Group and Westpac.
Members have 18 months from joining the NZBA to formulate their first set of intermediate decarbonisation targets. Targets should prioritise areas of the member’s business based on greenhouse gas emissions and exposures on their portfolios.
Of the 62 member banks that made submissions to the progress report, 95 per cent have measured their financed emissions, 66 per cent have set 2050 portfolio targets, and 94 per cent have set intermediate targets for 2030.
Intermediate targets must align with 1.5 degree transition pathways and must be achieved by 2030.
In addition to urging its members to accelerate their programs, the NZBA called on central banks and regulators to align on consistent frameworks and methodologies to co-ordinate net-zero transition globally.
And it called for greater transparency and standardisation of climate reporting metrics. It said it will support the work of the International Sustainability Standards Board, which is developing reporting standards and due to release them this year.