Dear Net Zero Banking Alliance members,

As we approach COP27, I thought it was a useful time to take stock of what we have achieved as the Net Zero Banking Alliance (NZBA) since our inception in April 2021 and to give you an update on our forward-looking agenda. I am delighted to have seen the growth of the NZBA from 43 founding members to a total of 119 banks at today’s date.

The banking sector has an important and powerful role to play in supporting the transition to net zero but, clearly, we cannot do this alone. Achieving net zero requires whole of system change including policy action, changes in societal behaviour and continuing advances on technical solutions to support transition, adaptation and ultimately decarbonization. The growth of the NZBA is, however, a testament to your commitment to seeing the banking sector play its critical role – supporting our clients – in the global transition to net zero emissions.

We recently published our Transition Finance Guide which provides non-binding guidance and recommendations on the role of banks in relation to transition finance. We will be publishing our first Collective Progress Report on 9 November which will provide detailed insight into the progress our members are making to date.

The Steering Group is currently working with the Secretariat on the workplan for next year, which will include starting to prepare for the review of the Guidelines by 2024 at the latest, as outlined in the Guidelines. You will shortly be receiving a request from the Secretariat for input into the workplan, particularly a request for guidance as to what you would find most helpful in enabling you to implement your respective plans and reach your respective net zero goals. I would encourage you all to respond to this so we ensure our work is focused on the areas that will be of most value.

I also wanted to take this opportunity to clarify some questions that have been raised about the NZBA’s governance and its relationship to other bodies, including Race to Zero (RtZ) and the Glasgow Finance Alliance for Net Zero (GFANZ). As a member of the NZBA you have pledged to the commitment statement and Guidelines which we published in April 2021. To deliver this, you, as members, must continue to set your own individual targets and make independent decisions as to how to meet those targets. The NZBA has an autonomous governance structure and decision making process, which is set out in the Governance document. Any changes to the NZBA’s Guidelines can only take place in accordance with that governance. We have, as NZBA members, committed to keep our Guidelines under review and as mentioned above, we will be starting to prepare for that review in 2023.

The NZBA is also a member of GFANZ. That membership is at an Alliance level and does not impose any additional or different obligations on NZBA members. As a member of GFANZ, the NZBA is obliged to: report on progress; provide membership updates; and to provide NZBA members with opportunities to participate in GFANZ workstreams, events and communications. While the GFANZ Principals Group includes some individual NZBA members, GFANZ has no decision-making authority in relation to the NZBA and cannot direct the NZBA or its members to act in any particular way.

The RtZ campaign exists to rally leadership and support from a diverse array of businesses, cities, regions, and investors for a healthy, resilient, zero carbon recovery that prevents future threats, creates decent jobs, and unlocks inclusive, sustainable growth. In 2021, RtZ’s expert peer review group confirmed that the NZBA’s Guidelines would meet the RtZ Starting Line criteria for a credible pathway to net zero by 2050. RtZ has since published updated criteria (in June 2022) which are due to be effective from June 2023.

The NZBA will independently consider RtZ’s updated criteria, together with any other relevant changes in the external environment and any lessons we have learned over the first years of implementing net zero commitments, and decide, through established NZBA governance, whether any changes should be made to our Guidelines to reflect these. It is important for members to understand that RtZ does not have the ability to impose requirements either on the NZBA as a whole or on individual members.

In conclusion, thank you again for your commitment and ambition to achieving net zero emissions as part of the NZBA, and for contributing to global efforts to curb climate change. The work we have ahead of us is challenging but more necessary than ever. We remain firmly committed to the banking sector playing its part to achieve the 1.5°C pathway. I look forward to continuing to work with you in the months and years ahead in support of this aim.

With thanks,

Tracey McDermott
Steering Group Chair, Net-Zero Banking Alliance