(Bloomberg) -- Canada’s largest banks may be the next group to walk away from the industry’s biggest climate-finance alliance.
The Net-Zero Banking Alliance has suffered an exodus in recent weeks, with Goldman Sachs Group Inc., Morgan Stanley, Wells Fargo & Co., Bank of America Corp., Citigroup Inc. and JPMorgan Chase & Co. all leaving. The moves coincide with intensifying Republican attacks on what US conservatives call “woke” capitalism and criticisms that such voluntary alliances haven’t had a meaningful impact on reducing greenhouse gas emissions.
Against that backdrop, two of Canada’s biggest lenders are now showing signs of reconsidering their own membership.
“Pulling out of NZBA, hypothetically, doesn’t lead to a non-commitment to net zero or climate change,” Royal Bank of Canada Chief Executive Officer Dave McKay said Tuesday at an industry conference hosted by his firm in Toronto. “It just means that mechanism, that organization that fostered oversight and policies and rules around what you can and can’t do and how you report, maybe that isn’t the right mechanism to do it.”
Speaking at the same event, Bank of Montreal CEO Darryl White said the bank is still a “member of the alliance. At least we are today.”
As of Wednesday, NZBA’s website still listed the lenders as members. A spokesperson for the group declined to comment.
The US banks that have left the alliance say they haven’t changed their net zero emissions goals and they remain supportive of clients’ plans to reduce their carbon footprints.
White said that regardless of the “mechanism,” BMO remains committed to the transition to a low-carbon economy. At the same time, he said the company also has “a commitment, particularly here in Canada, to our legacy energy customers completely. We won’t abandon that.”
Canadian banks were some of the biggest providers of finance to oil, gas and coal in 2024, with Toronto-Dominion Bank, RBC, BMO and Canadian Imperial Bank of Commerce ranking among the top 10 for such deals, according to data compiled by Bloomberg. The biggest provider of fossil-fuel finance last year was JPMorgan.
Banks leaving groups like NZBA show “the limitations of these voluntary” alliances, said Keith Stewart, senior energy strategist at Greenpeace Canada. “If we want to avoid ever-more communities burning from climate-fueled wildfires or submerged in record flooding, then governments must regulate the sector to move the money out of fossil fuels and into climate solutions.”
In response to a Bloomberg request for comment, a spokesperson for the Canadian Bankers Association said each member decides on NZBA participation independently of the lobby group.
“Canadian banks are each implementing and reporting on their own climate strategies and plans,” which includes specific regulatory requirements “in the Canadian context,” the spokesperson said.
The defections that have hit NZBA follow exits across similar alliances in other corners of the finance industry. In 2023, a net zero group for insurers saw a mass walkout amid GOP litigation threats. A similar group for investors, Climate Action 100+, was hit by high-profile defections last year as the asset management arms of Goldman and JPMorgan, as well as Pacific Investment Management Co. all left. And in 2022, a net zero group for asset managers parted ways with Vanguard Group Inc., the world’s second-largest money manager.
(Adds comment from Greenpeace Canada in 10th paragraph.)
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