Political and regulatory pressures drive the departures
The Bank of Nova Scotia has become the latest to exit the Net-Zero Banking Alliance (NZBA), following a mass exodus led by Wall Street, with major US institutions such as Goldman Sachs, Morgan Stanley, Wells Fargo, Bank of America, Citigroup, and JPMorgan also leaving the alliance.
The Canadian bank confirmed to Bloomberg its withdrawal, joining Toronto-Dominion Bank, Bank of Montreal, Canadian Imperial Bank of Commerce, and National Bank of Canada, which all exited the group just days earlier.
Despite leaving the NZBA, Scotiabank stressed that it remains committed to sustainability efforts.
Scotiabank's spokesperson Katie Raskina said in an emailed statement to Bloomberg that the bank will continue financing the transition to a low-carbon economy and supporting clients in their sustainability strategies. Scotiabank also assured it would continue to report on its progress while adhering to global regulatory standards.
These departures from the NZBA are part of a broader reconsideration of climate finance, driven by political and regulatory pressures.
US President Donald Trump’s signals to roll back Biden-era climate policies, coupled with intensified legal challenges from Republican-led states, have further complicated the landscape for financial institutions involved in climate initiatives.
Royal Bank of Canada (RBC) remains the only major Canadian bank still in the NZBA, though its CEO, Dave McKay, has suggested the bank may also reconsider its membership. McKay stated earlier this month that leaving the alliance would not indicate a lack of commitment to net-zero goals or climate change.
In 2024, Canadian banks such as Toronto-Dominion, RBC, Bank of Montreal, and CIBC were among the top global financiers of fossil fuels, ranking in the top 10 for oil, gas, and coal deals, according to Bloomberg data. JPMorgan Chase & Co. was identified as the largest financier of fossil-fuel projects that year.
The wave of departures extends beyond banks. Other climate-focused initiatives have also faced defections.
BlackRock’s exit from the Net Zero Asset Managers initiative, citing legal concerns, mirrors the broader challenges facing climate-focused groups. In recent years, the Net-Zero Insurance coalition and Climate Action 100+ have also experienced significant withdrawals.
With mounting pressures from political and regulatory forces, how will financial institutions navigate their climate commitments moving forward? Share your thoughts in the comments.
