Influencing global guidelines towards a net zero finance industry

In 2021, we became the first Building Society to join the Net Zero Banking Alliance (NZBA). NZBA was set up three years ago to support the banking sector in decarbonising its lending and investments to reach net zero by 2050. It has more than 140 members of different sizes and business models, operating all over the world. For us, being a member is part of the ‘Agitating for Change’ pillar of our 2030 Strategy.

Three years on, the NZBA has updated the Guidelines that Alliance members must follow. Together with other values-based banks in the Alliance, we’ve used our voice throughout the development process of the updated Guidelines, calling for much stronger language around phasing out fossil fuels and firmer criteria for member banks to set out how they will decarbonise.

The new Guidelines, published today, don’t go as far as we would wish. But they do advance ambition compared to the original version and will be used by banks globally.

For that reason, we voted in favour of adopting them, and are opting to continue to participate in the NZBA. Bearing in mind the scale of the issues at stake, we believe collaboration between businesses is essential to make real progress towards net zero and help the UK meet its binding international commitments.

Joint statement on the updated NZBA Guidelines from Amalgamated Bank, Ecology Building Society and Triodos Bank

We welcome the steps NZBA has made to advance the work of decarbonising the banking sector. It remains the only major, global commitment for the banking sector on target-setting committed to a 1.5℃ limit of global warming.

The updated Guidelines give much-needed direction on setting and publishing transition plans for the highest-emitting sectors, and including facilitated emissions in climate targets. However, the language used provides too much latitude for banks in deciding whether to take key steps that are central to credibly achieving portfolio alignment with science-based climate scenarios. By merely “encouraging” disclosure of policies for the highest emitting sectors, rather than requiring it, the Guidelines undermine the transparency and action necessary to ensure safer climate outcomes.

The reality is that we are not on track to stay within safe levels of warming and more needs to be done. Particularly the transition away from fossil fuels that has been agreed globally. The dominant economic and scientific climate scenarios make abundantly clear the need to end new fossil fuel expansion and rapidly phase out supply in favour of clean energy sources.

While the updated Guidelines represent progress since NZBA’s founding three years ago, we call upon banks inside and out of the Alliance to raise the bar in developing policies and disclosures for the highest emitting sectors and ensure a fair and fast transition to a liveable planet.

The work of banks must also be done in partnership with governments, which have the greatest impact on real economy emissions, and which are significantly behind on delivering a 1.5℃ world. We call on governments to more aggressively move to advance plans and policies that decarbonise the economy.

We appreciate the fact that all members of NZBA have an equal opportunity to influence the debate. As members of both the Global Alliance for Banking on Values (GABV) and NZBA, we have made progress by working together to contribute a strong science- and values-based voice during this process. We remain committed to actively engaging within NZBA to push for further progress.