Canadian Banks Abandon Net-Zero Banking Alliance: A Blow to Climate Action or a New Path?

As Donald Trump prepares to return to the White House, a wave of major banks, including four of Canada's biggest lenders, have withdrawn from the Net-Zero Banking Alliance (NZBA). This move has raised eyebrows and sparked debate about the future of climate action in the financial sector. In this article, we'll explore the implications of these withdrawals and consider whether this is a setback for the NZBA or a new path for banks to tackle climate change.

Why are banks leaving the NZBA?

The departures from the NZBA began with Goldman Sachs' announcement in December 2024 and have since been followed by major US and Canadian banks, including TD Bank, Bank of Montreal, National Bank of Canada, and Canadian Imperial Bank of Commerce (CIBC). These banks have cited their ability to work outside the alliance and develop their climate strategies independently as the primary reason for their withdrawal.

CIBC, for instance, stated that "As this space has evolved and matured, and having made significant progress alongside our clients in these areas, we are now well-positioned to further this work outside of the formal structure of the NZBA." Similarly, BMO emphasized their robust internal capabilities to implement relevant international standards, supporting their climate strategy and meeting regulatory requirements.