Bank of Nova Scotia or Scotiabank, on Monday, walked away from the global banking sector climate coalition, Net-Zero Banking Alliance (NZBA), following the footsteps of some of the Canada’s biggest lenders. This also comes at a time when six of the major US banks withdrew from the coalition.
On January 17, Toronto-Dominion Bank Group, Bank of Montreal, National Bank of Canada and Canadian Imperial Bank of Commerce (CIBC) called off their association with the NZBA. Earlier in January, JPMorgan Chase and Morgan Stanley decided to withdraw. In December, Bank of America, Citigroup, Wells Fargo and Goldman Sachs were among the major lenders to withdraw from the coalition.
"We remain committed to delivering our Climate Transition Plan, and will continue to finance the transition and support our clients in implementing their sustainability strategies—this is the most important role that we can play," Scotiabank spokesperson Katie Raskina said, as cited in a Reuters report.
The bank's withdrawal also coincides with Donald Trump's election as the President of US, who is known to consider climate change a hoax.
NZBA was formed under the UN-backed Glasgow Financial Alliance for Net Zero (GFANZ). A group of nearly 140 leading global banks, NZBA pledged to prioritise clean energy investments by aligning their portfolios with 2050 net-zero goals. In COP26 climate summit held in Scotland in 2021, it had announced a commitment of $130 trillion.
The exodus of major US bank is concerning for the sustainability projects in the countries in the Global South and across the developing world. Rahul Prithiani, senior director at CRISIL Intelligence had told Outlook Business earlier, “The exit of six leading US banks from the NZBA is a severe blow to global climate efforts. This dilutes international climate diplomacy and sends a chilling signal to emerging markets reliant on external funding.”
Earlier, Franklin Templeton had also announced its exit from Climate Action 100+, an investor-led group formed to press companies to cut emissions.
The exodus can be attributed to the concerns over climate commitments, charges of greenwashing, political antitrust suits and also the fears of political backlash. Many fear that the MAGA-driven political shift in the US could unleash a strong pushback against environmental, social and governance (ESG) initiatives.
