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September 15, 2022updated 16 Mar 2023 11:27am

Exclusive: NGOs push NZBA to meet Race to Zero guidelines

A global coalition of NGOs is demanding the Net Zero Banking Alliance set stricter rules on fossil fuel financing to comply with Race to Zero’s updated criteria, following recent indications that the network may not do so.

By Polly Bindman

Mark Carney (right) and Michael Bloomberg, co-chairs of the Glasgow Financial Allianz for Net Zero, welcomed the Race to Zero guidelines. (Photo by Chesnot/Getty Images)
  • A coalition of NGOs has written to the UN Environment Programme Finance Initiative, asking it to clarify statements made to Capital Monitor that it was unlikely to update its guidelines to fit Race to Zero’s updated June criteria, and to outline how it plans to implement the new rules.
  • The new criteria require existing members to commit to phasing down and out all fossil fuels from June 2023, in a step up from current rules under the Net Zero Banking Alliance.
  • Confusion over whether the Net Zero Banking Alliance will require members to commit to phasing out all fossil fuels or lose Race to Zero accreditation raises questions about the purpose of such alliances.

A coalition of climate-focused non-government organisations (NGOs) is urging the Net Zero Banking Alliance (NZBA) to make firmer public commitments to achieving net zero emissions after the influential group made a statement to Capital Monitor casting doubt on its pledges in this regard.

In a letter sent on 13 September to Eric Usher, head of the UN’s Environment Programme Finance Initiative (UNEP FI), the group of NGOs expressed concern at the possibility that the NZBA, which is convened by the UNEP FI, may not need to update its rules for banks in line with the recently strengthened Race to Zero criteria, something many were assuming was a done deal.

In the letter, seen in advance by Capital Monitor, the NGOs request that the NZBA provide a response outlining both the process for how it will update its guidelines to meet the new criteria and what the consequences will be for members that do not comply with the updated rules.

The NGOs – which include Bank on Our Future, Global Witness, Reclaim Finance, ShareAction and Sierra Club – added: “The continued accreditation of the NZBA as a Race to Zero partner will depend on the alliance updating its guidelines to reflect the latest Race to Zero criteria.”

Race to Zero provides accreditation to the Glasgow Financial Alliance for Net Zero (Gfanz), the umbrella group for seven net-zero initiatives for financial institutions, of which NZBA, which represents almost 40% of banking assets globally, is a member.

Removal of that accreditation could have huge reputational consequences for the alliance, Kelly Shields, senior campaign officer at ShareAction, tells Capital Monitor. “It would have a really devastating effect in terms of how people perceive the finance industry and its commitment to net zero.”

It is unclear whether Gfanz as a whole would lose accreditation, or just the NBZA, Shields says.

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‘Inconsistent’ guidelines

The NGOs’ letter was prompted by a 17 August article in Capital Monitor, in which Remco Fischer, climate lead for the UNEP FI, said he did not think individual alliances under the Gfanz umbrella, including the NZBA, should need to update their policies to meet new criteria outlined by Race to Zero.

In the letter, the coalition of NGOs argued that the NZBA’s guidelines were “inconsistent” with the new Race to Zero criteria. They wrote: “We were extremely concerned to read the article in Capital Monitor… that UNEP FI believes ‘it is unlikely that individual alliances will need to update their core commitments to meet Race to Zero’s new rules’.”

Race to Zero’s June update to its ‘starting line criteria’ for the first time included the need for members to commit to phasing down and out all unabated fossil fuels, starting from June 2023. It also required members to account for investees’ and clients’ underlying Scope 3 emissions, set targets based on absolute rather than intensity emissions metrics, and publish transition plans to show how they will meet these commitments.

The coalition’s letter demands that the UNEP FI and the NZBA’s steering committee ensure banks adhere to Race to Zero’s new rules and urges the convening groups to ‘strongly encourage’ NZBA members to move beyond the starting line, while implementing ‘Leadership Practices’ as defined by the Race to Zero.

It remains unclear how the NZBA could remain accredited by Race to Zero without updating its criteria, considering the discrepancy between Race to Zero’s guidelines and the alliance’s existing policies on fossil fuels. For example, there is no mention of fossil fuels in the NZBA’s existing commitment statement, while its target-setting guidelines state only that member banks must include fossil fuels within their targets and transition plans.

It may be that the NZBA is set to update its net-zero guidelines accordingly, and that the NGOs’ concerns are premature. The coalition has requested the UNEP FI respond to the letter by 11 October.

A spokesperson for NZBA refrained from commenting on the contents of the letter, but said the alliance had “its own autonomous governance processes” that cover policy decision making and that it was “working through its response to the new criteria from Race to Zero”, which would include an engagement process with Race to Zero.

Potential loss of trust

The fact that NGOs were prompted to write such a letter points to a potential loss of trust in terms of how they perceive the current actions from the financial sector on net zero.

Initially, following Race to Zero’s June announcement, NGOs had praised the new guidelines, expressing relief that NZBA signatories would finally be bound by firm guidelines on fossil fuel financing. For example, Reclaim Finance, a signatory to the letter, wrote that Gfanz must now “pick up the gauntlet and ensure that all its members align with the new Race to Zero targets and expectations”.

Shields says ShareAction’s reaction to Fischer’s August remarks made to Capital Monitor was “one of surprise and confusion”.  Particularly, she adds, given that the UNEP FI was a convener of the groups, meaning “they should be the ones really pushing and leading on some of those processes to get the guidelines updated”.

What’s more, Gfanz co-chairs Mark Carney and Michael Bloomberg wrote a joint letter in August welcoming the new guidelines, stating: “We want to be unequivocal on this point: there is no rationale for financing new coal projects.”

And that same month, Gfanz vice-chair Mary Schapiro told the Financial Times: “We absolutely welcome Race to Zero’s new compliance mechanism… to identify and remove members who fail to meet its criteria”.

Such mixed messaging highlights the difficulty of galvanising such a large group of institutions to achieve net zero, all under a single umbrella group. Gfanz may have helped to mobilise pledges of some $130trn of capital to achieving net zero by 2050, but it clearly has a long way to go to translate statements into actions.

Capital Monitor is hosting the second day of its Making Sense of Net Zero webinar series, alongside the New Statesman and Tech Monitor on September 21. Find more information on

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