Five Canadian banks join exodus from Net-Zero Banking Alliance

Five of Canada’s biggest banks have pulled out of a global climate coalition for the financial sector, Reuters reported on January 20.

Key Canadian lenders, Bank of Nova Scotia, Bank of Montreal, National Bank of Canada, Canadian Imperial Bank of Commerce and TD Bank have all pulled out of the Net-Zero Banking Alliance (NZBA) with Donald Trump’s return to the White House.

Upon joining the initiative, which was founded in 2021, banks committed to adhere to business and lending practices that would help to reach net zero greenhouse gas emissions by mid-century.

The moves by the Canadian banks mirror a similar trend in the US that began after Trump was declared victorious in the November election. A handful of financial institutions, namely Wells Fargo, Goldman Sachs, Citigroup, Morgan Stanley and Bank of America all exited the United Nations-backed NZBA.

As day one business after being sworn-in, Trump, for the second time, withdrew the US from the Paris Agreement, which pledges countries to cut greenhouse gas (GHG) emissions as part of the global goal to limit the world’s temperature increase to well below 2°C, while also pursuing efforts to limit the rise to 1.5°C. 

Trump’s move comes as little surprise, as throughout his election campaign he promised to enact pro-fossil fuel policies if elected and voiced disdain for climate-change policies and legislation supporting the renewable energy sector, most notably calling a tax credit scheme for electric vehicles a “green new scam”.

The banks withdrawal from the climate coalition also comes at a time when the effects of climate change are front and centre with the devastating Los Angeles fires continuing to rage. The wildfires have burned for more than two weeks and have claimed over two dozen lives and destroyed over 17,000 buildings.

In addition to the banks withdrawing from climate coalitions, a large number of asset managers have also pulled out of the UN-backed Net Zero Asset Managers (NZAM) coalition, which was founded in 2020 by 30 asset managers handling about $9 trillion in investments.

Prior to Trump’s election victory, NZAM had snowballed to include more than 300 asset managers representing over $57 trillion in assets.

Additionally, the US Federal Reserve also revealed on January 17 that it has exited the Network of Central Banks and Supervisors for Greening the Financial System (NGFS). The global coalition unites central banks to work together to address climate change and support green finance initiatives.