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- NZBA member banks vote in favour of adopting updated guidelines
- Emissions attributable to banks’ capital markets services included for first time
- Overall ambition and key principles of original guidelines maintained
Members of the bank-led, UN-convened Net-Zero Banking Alliance (NZBA) have chosen to update and reinforce their climate commitments by voting to adopt a new version of the Guidelines for Climate Target Setting for Banks.
For the first time, the scope of targets will extend to include banks’ capital markets activities. For some banks, capital markets arranging and underwriting services provided to clients in the issuance of new debt and equity instruments are their largest source of attributable greenhouse gas emissions. The new guidelines will also add, update, and clarify technical language to reflect the evolution of practices, methodologies, and data availability in the last three years, including around policy engagement and transition planning.
“NZBA is made up of more than 140 member banks of different sizes and business models operating in various jurisdictions and economies. The threefold increase in our membership since we were established in 2021 demonstrates the significance of climate change to banks operating all over the world. The updated guidelines will support our member banks as they manage climate-related risks and opportunities and support the transition of the real economy,” said Tracey McDermott, Chair of the NZBA Steering Group, and member of Standard Chartered’s management team.
Importantly, the overarching ambition and key principles of the original guidelines are maintained. Banks still commit to reaching net zero by 2050 or sooner, setting intermediate 2030 sectoral targets in line with the latest science using low or no overshoot 1.5°C scenarios and covering all or a substantial majority of nine carbon-intensive sectors.
NZBA member banks have led a review of the Guidelines since early 2023 ahead of NZBA’s three-year anniversary in April 2024. A large number of member banks shared their views on what an updated version might look like, informed by their experience of applying the guidelines, setting and implementing climate targets, and financing transitions in different sectors. Based on these consultations, NZBA sent a new proposed version to the membership in February 2024 which they have now voted to adopt. To adopt the proposed updates, over 50% of NZBA’s members had to vote, and two thirds of votes cast had to be in favour. Votes comfortably cleared both thresholds.
The original version of the Guidelines was published to coincide with NZBA’s launch on 21 April 2021. Alongside the NZBA Commitment Statement, it details the commitment that each NZBA bank individually and voluntarily chooses to make when becoming a member and states that the guidelines, ‘…will be reviewed at least every three years.’
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“This bank-led update to the Guidelines, and its important addition of facilitated emissions from capital market activities, ensures that current and future NZBA member banks will continue to set targets in line with the most ambitious temperature goals of the Paris Agreement and the latest science,” said Eric Usher, Head of the UN Environment Programme Finance Initiative (UNEP FI). He continued: “Doing so positions these banks to prosper as economies around the world decarbonise and transition towards a cleaner, healthier, and more resilient future.”