Carney’s UN-Backed Green Bank Alliance Pauses Activities While Members Vote on ‘New Framework’

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A global green bank alliance, which Prime Minister Mark Carney helped create, is pausing its activities while its members vote on whether the alliance will be restructured following the withdrawal of numerous members.

The United Nations-backed Net-Zero Banking Alliance (NZBA) says it has initiated a vote for its member banks to decide on a proposal to transition “from a membership-based alliance to establishing its guidance as a new framework initiative.” The decision to initiate the vote was based on member input, the alliance says.

“NZBA has paused its ongoing activities while members complete the current voting process and will share the outcome once voting concludes at the end of September,” the alliance said in an Aug. 27 press release.

Four of Canada’s major banks left the alliance leading up to U.S President Donald Trump’s inauguration on Jan. 20, including the Bank of Montreal (BMO), TD Bank, National Bank of Canada, and the Canadian Imperial Bank of Commerce (CIBC), who announced they were leaving the coalition on Jan. 17. Following suit, Scotia Bank announced it was leaving the pact on Jan. 20, and the Royal Bank of Canada (RBC) on Jan. 31, leaving none of Canada’s “Big Six” banks represented in the group.

The Canadian banks left the alliance following the withdrawal of the six largest U.S. banks after U.S. President Donald Trump was elected on Nov. 5 last year, including Goldman Sachs, Wells Fargo, Bank of America, Citigroup, Morgan Stanley, and JPMorgan.

Some U.S. Republican politicians have been critical of the alliance, with U.S. Representative Andy Barr saying the alliance is meant to “weaponize the financial system and politicize it to choke off funding to legal fossil energy businesses.”

Conservative MP Matt Strauss noted in an Aug. 29 X post that the pact created by Carney closed after five years, while calling the initiative “undemocratic” and accusing it of being “meant to defund Canadian industries.”

The United Nations has said that the purpose of the NZBA is to “help develop sustainable economies and to empower people to build better futures.” In its latest release on the member vote it said the alliance was “committed to supporting banks [to] address the impacts of climate change and associated economic impacts.”

The alliance said on Aug. 27 that it believes a new framework structure is “the most appropriate model to continue supporting banks across the globe to remain resilient and accelerate the real economy transition in line with the Paris Agreement.” The alliance has not provided any details on what the framework might look like.

The NZBA commits member financial institutes to align their lending and investment decisions with “net-zero greenhouse gas emissions by 2050.” Its membership grew from 43 banks to 144 in the three years following its creation.

The initiative was co-led by Carney in 2021 while he was the U.N. Special Envoy on Climate Action and Finance, a role he resigned before becoming a candidate in the Liberal leadership race in January.

The alliance was created as part of the Glasgow Financial Alliance for Net Zero, which intended to unite financial institutions and other financial services to address the “barriers companies face to scaling decarbonization.” Carney was also behind the launch of the Glasgow Alliance.

Shift Away From Net-Zero

When BMO left the alliance, it said that it remained “fully committed” to its climate strategy, which it could support with “robust internal capabilities.” BMO chief executive Darryl White said the bank would soon leave the alliance at a conference earlier in January. At the same meeting, RBC chief executive Dave McKay said the the NZBA was in flux, questioning whether it could sufficiently reduce emissions.

CIBC said the alliance was established during a period when the global sector was intensifying its climate initiatives, but the landscape has progressed sufficiently for the institution to pursue its objectives independently. Similarly, TD said it has the necessary resources to further its own strategy.

The National Bank of Canada said it had withdrawn from the alliance as it streamlines its reporting processes and that it planned to work with businesses in all sectors to promote decarbonization.

Carney commented on the unravelling of the NZBA during his appearance on “The Daily Show” with Jon Stewart on Jan. 14. He argued the U.S. banks would likely reverse their decision after the next presidential election.

The Canada Pension Plan has also diverted from its net-zero emissions by 2050 commitment, which it committed to three years ago. Its investment board said in May that the goal of achieving net-zero emissions presents “both risks and opportunities for long-term investors.”

Jennifer Cowan and Matthew Horwood contributed to this report.