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Internal tensions are rising within the Net-Zero Banking Alliance, an offshoot of the Glasgow Financial Alliance for Net Zero, as transition-focused members get annoyed that less conscientious ones are being allowed to continue financing oil and gas.
According to a Bloomberg report, the Net-Zero Banking Alliance’s leadership made concessions to Wall Street banks in order to keep them on board and that made other banks, which had made ambitious emission pledges angry. One of the latter, a German lender called GLS Bank, had already left the alliance.
The report also cited a representative of a Dutch bank specialized in green finance as saying that the concessions that the NZBA had made to Wall Street banks were “disappointing and discouraging.”
The concessions in question come down to a slight distancing of the Net-Zero Banking Alliance from the UN’s Race to Zero—another tool for advancing the energy transition agenda—which would have made it obligatory for banks to stop financing oil and gas projects.
The reason that the NZBA did that was to keep on board members such as JP Morgan, Morgan Stanley, and Bank of America. What appears to frustrate some of their fellow NZBA members is that these banks can keep calling themselves committed to the transition through their membership in the alliance while continuing to fund oil and gas.
Because of this freedom granted by the NZBA leadership, “a significant proportion of NZBA members continue to lack an appropriate approach to their own climate and environmental impact,” the German bank that quit the alliance, GLS, said, as quoted by Bloomberg.
The NZBA is not the only organization of this kind facing internal pressure. Last December, Vanguard quit another net-zero-focused alliance, this time for asset managers, citing its desire to preserve its independence.
"We have decided to withdraw from NZAM [Net Zero Asset Managers] so that we can provide the clarity our investors desire about the role of index funds and about how we think about material risks, including climate-related risks—and to make clear that Vanguard speaks independently on matters of importance to our investors," Vanguard said in a statement.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.