Impact of NZBA Departures on Climate Strategies

This technical report discusses the recent departures of several prominent US and Canadian banks from the Net Zero Banking Alliance (NZBA), which has resulted in a significant decline in the alliance's total assets. The report outlines the potential reasons behind these exits, particularly the shift in climate policy under the new Trump administration, which is perceived to favor fossil fuel investments over clean energy initiatives. It details how this policy change could lead to lower profitability for green projects and increased attractiveness for fossil-fuel investments. The report also examines the implications of these banks' decisions on their climate strategies and the broader energy transition. It highlights the systemic importance of these banks and the potential long-term risks associated with not investing in green initiatives, including exposure to climate-related risks. The analysis emphasizes the interconnectedness of banks' financial health, government policies, and their climate ambitions.