Mark Carney

A new banking alliance has been established, claiming to set ambitious targets in addressing the climate crisis. Sounds great, right? Yet the Net-Zero Banking Alliance is sadly a wasted opportunity that does nothing to bring big banks closer to ending fossil fuel funding.


The initiative is part of the hoopla surrounding the two-day climate summit later this week, organised by US president Joe Biden and special climate envoy John Kerry.


Also fronting the alliance is Mark Carney – you may remember him as the previous governor of the Bank of England. He’s now a UN special climate envoy as well as finance advisor to the UK presidency of Cop26.


The alliance brings together 43 banks representing $28.5 trillion in assets, including Bank of America Merrill Lynch, Barclays, Citi, HSBC, Morgan Stanley and NatWest. These are some of the top funders of fossil fuels in the world, so getting them to make serious moves towards decarbonising their portfolios would be extremely welcome.


However, that’s not what the Net-Zero Banking Alliance offers and there are many, many holes which mean this new project fails to deliver.


No obligations to end fossil fuel financing
You read that right. There is no requirement to make commitments about winding up involvement in coal, oil and gas. Some banks are already setting these goals, so not making this mandatory for membership is a backward step. Any net-zero plan that doesn’t include this is a dud from the start.


Deadlines are too far in the future
Banks will have three years to set targets for 2030, and then another year to reveal their plans. That takes us to 2025, and during that time these banks will still be facilitating high-carbon industries. These decarbonising plans were needed yesterday so emissions can be cut now – waiting another four years is just too long.


Underwriting is not included
The alliance will address members’ lending practices, but not underwriting. By taking on the financial risks for fossil fuel projects, banks are providing as much finance as they do through loans. Again, some banks already include underwriting in their carbon reduction plans, so this is another backward step compared to what’s already happening in the sector.


No mention of other high-carbon industries
Fossil fuel companies are a major contributor to global emissions, but of course there are other industries pumping carbon into the atmosphere. Deforestation and land use change is another huge source, yet companies involved in these practices aren’t covered by the alliance pact.


Offsetting is a-okay
Alliance members won’t be held to account if they indulge in some creative carbon accounting. Offsetting fossil fuel emissions with (for instance) renewable energy projects is fine according to the membership rules, but the concept of ‘avoided emissions’ is a flimsy one. Carbon released from burning fossil fuels will still be in the atmosphere, so supposedly counteracting them with emissions avoided by using renewable energy elsewhere is a sleight of hand that won’t put the brakes on global heating.


There are holes aplenty in Carney’s plan and, to cap it all off, it’s voluntary. Banks don’t have to sign up, and it’s questionable whether there are any penalties for failing to meet even the low expectations set out in the alliance manifesto.


Instead of yet another voluntary back-slapping exercise which provides cover for the banks and allows them to mark their own work, decisions need to be taken out of their hands. Central banks need to step in and set regulations obliging commercial banks to rapidly reduce their involvement in fossil fuels and other high-carbon sectors.


If Mark Carney (and, indeed, the US administration) is serious about getting banks to slash emissions they’re responsible for, the Net-Zero Banking Alliance needs to be far more than the greenwashing exercise it currently is.


Here’s what organisations campaigning on climate finance have said about the new alliance:


Jeanne Martin, senior campaign manager at ShareAction, said: “The alliance is a missed opportunity to define climate leadership for the banking sector ahead of COP26. Many European banks are already working towards the bulk of the mandatory guidelines set out by the alliance. Net-zero plans cannot be considered credible without addressing underwriting and setting dates to phase out financing for fossil fuels and deforestation. It is time for regulators to step in to prevent financial and planetary instability.”


Becky Jarvis, senior strategist for the Bank on Our Future network, said: “All that glitters is not gold. What seems at first glance to be quite ambitious, actually lacks the urgency and ambition that the climate crisis demands. This is not the climate leadership that the world needs from Carney, it is a cover for banks to hide behind, and could serve to undermine some best practice in the sector. Net-zero means fossil fuel phase out, a term which this alliance seems to be allergic to. There is clearly a need for regulators to take stronger action on banks driving up emissions which are already dangerously high.”


Richard Brooks, climate finance director at, said: “We can’t wait several more years for banks to start taking real action to reduce their financed emissions, let alone set targets for doing so. This means banks will continue to invest in fossil fuel companies in the short term, effectively fiddling while Rome burns.”


Adam McGibbon, UK campaigner at Market Forces, said: “This is the European Super League of the banking world – disappointing and infuriating. It’s simple – if banks care about climate change, they need to spend less time with lip-service initiatives like these, and more time setting out their plans for rapidly getting off fossil fuels.”


Moira Birss, climate and finance director at Amazon Watch, said: “If financial firms and the Biden administration think the climate movement will be impressed by vague plans to supposedly reduce emissions way in the future with huge leeway to “offset” emissions, think again. We need immediate phase out of fossil fuel and deforestation finance NOW.”


Lucie Pinson, founder and executive director of Reclaim Finance, said: “Another day, another net-zero initiative. It’s getting hard to keep track of them but one thing is certain – the banking and financial net-zero alliances launched today aim more to give their members cover than to undertake new measures to protect the climate. How else to explain the leisurely timelines, failure to require even an end to coal financing, or the inclusion of two of Europe’s biggest fossil fuel financiers in Barclays and BNP Paribas? When it comes to climate, actions speak louder than words – that means comprehensive measures to phase out fossil fuels. Nothing less will do.”


Regine Richter, finance campaigner at Urgewald, said: “Both Deutsche Bank and Commerzbank are still providing billions in financial services to the coal industry. If the two joining this initiative means they are ready to clean up their act and get out of fossils, this step is very welcome. If them joining the initiative is mainly intended to silence critics, this puts the entire alliance into question.”


Johan Frijns, director of BankTrack, said: “The Net Zero Banking Alliance launched today turns out to be another bank initiative that is in denial about the urgent need to terminate all bank finance for the fossil fuel industry. No amount of long term target setting, no level of sophistication in measuring financed emissions, no elaborate reporting schemes will make up for this basic flaw in this new Alliance. At this point in time, bank initiatives without fossil fuel finance commitments only serve to increase cynicism levels about banks willingness to tackle their role in financing climate chaos”


Jason Opeña Disterhoft, climate and energy senior campaigner at Rainforest Action Network, said: “The GFANZ is the broadest affirmation yet that global financial institutions drive climate change, and must decarbonize by midcentury, like all major emitters. This is another sign that the climate movement is winning the argument. But while today’s initiatives build a big tent, they set a low bar. For banks, the slow timelines, limited scope, acceptance of intensity targets, and vagueness on fossil fuels and deforestation come in well below established global best practice. Today’s announcements don’t change the bottom line. Financial institutions have to stop fueling fossil expansion and deforestation, and phase out all support for fossils, starting immediately. They should know that’s the standard by which they’ll continue to be judged, and they will face growing pressure for concrete action before Glasgow.”


Ben Cushing, financial advocacy campaign manager at the Sierra Club said: “The Net-Zero Banking Alliance reaffirms that the banking industry must align with the goals of the Paris Agreement and makes progress toward rigorous near-term targets and action this decade, not just vague promises for 2050. But banks’ most urgent and important task continues to be stopping fossil fuel financing, which is the only way any of these targets will be met. The big US banks that have joined — Morgan Stanley, Citi, and Bank of America — are taking a small step toward faster action, and it’s disappointing that JPMorgan Chase, Wells Fargo, and Goldman Sachs couldn’t even join their peers to clear this low bar yet. It’s clear that Wall Street isn’t going to take sufficient action to confront the climate crisis on its own, which further underscores the need for bold action from financial regulators, and we look forward to seeing the Biden Administration implement strong regulations and safeguards to hold them accountable.”