The UN’s climate banking alliance drops the 1.5°C goal, signaling a softer approach to net zero. Keyword: climate banking alliances
NZBA opens the door to less ambitious targets in climate transition plans
In a near-unanimous vote, the Net-Zero Banking Alliance (NZBA) has revised its climate target framework, embracing more “flexible” transition paths. The move means the UN-backed climate banking alliance is formally stepping away from the 1.5°C objective of the Paris Agreement.
Farewell, Paris?
At the height of the decade deemed critical for climate action, the NZBA – the world’s leading coalition of banks committed to achieving net zero emissions – has officially adopted a set of changes to its strategic guidelines.
In practice, this shift represents a significant rollback of previously stated climate ambitions. The most notable change: abandoning the firm 1.5°C target in favor of the broader “well below 2°C” language from the Paris Agreement.
A formal shift with real consequences for climate banking alliances
Backed by the United Nations and made up of more than 120 global banking institutions, the NZBA announced the vote results with celebratory language. The alliance framed the update as “a new phase” intended to “enhance support for banks” and “unlock opportunities for decarbonizing the real economy.”
Such language comes as the group faces a steady loss of major members. Several financial heavyweights have withdrawn from the climate banking alliance in recent months. In January, BlackRock, the world’s largest investment fund, exited. In December 2024, Goldman Sachs Group, Wells Fargo & Co., Citigroup, and others followed suit.
The new guidelines signal a broader effort to ease requirements and soften expectations. Among the adopted changes:
- Banks may now adopt a wider range of transition scenarios. These scenarios are no longer limited to the 1.5°C pathway but may include less ambitious trajectories, as long as they align with keeping global warming “well below 2°C.”
- Each bank is now responsible for defining its own climate strategy.
- The NZBA formally acknowledges the growing challenges banks face, including regulatory pressures, geopolitical tensions, and the slow pace of transition in key sectors like construction and aviation.
While the official language still refers to the 1.5°C goal as a “North Star,” the introduction of greater flexibility in alignment pathways effectively weakens the alliance’s prior commitments.
