Canadian Banks Exit Net-Zero Banking Alliance Amid North American Trend

Canada’s largest banks are following the lead of their U.S. counterparts, exiting the UN-backed Net-Zero Banking Alliance (NZBA), a coalition established to align financing activities with global net-zero goals. Over the past week, five of Canada’s “Big Six” banks—BMO, TD, CIBC, Scotiabank, and National Bank—confirmed their withdrawal. The Royal Bank of Canada (RBC) remains the sole participant but has hinted at reconsideration.

The NZBA, launched in 2021, commits members to achieve net-zero greenhouse gas (GHG) emissions across operational and financed activities by 2050, with interim 2030 targets focused on high-emission sectors. Despite the alliance’s rapid growth to over 140 banks managing $74 trillion in assets, political pressures—primarily from Republican lawmakers in the U.S.—have targeted the coalition, alleging potential legal violations and threatening exclusion from state business contracts.

Notably, Canadian banks maintain a significant U.S. presence, amplifying the influence of anti-ESG sentiment. Their exit follows a similar decision by major U.S. banks, including Citi, JPMorgan, BofA, and Goldman Sachs.

Despite leaving the alliance, Canadian banks reaffirm their commitment to sustainability. Statements from institutions like CIBC, BMO, and TD emphasize their ability to advance climate strategies independently. CIBC acknowledged the NZBA’s early role in driving climate action, stating, “As this space has evolved, we are now well-positioned to further this work outside the formal structure of the NZBA.” BMO highlighted its “robust internal capabilities” to meet international standards, while TD affirmed its capacity to “advise clients and seize new opportunities.”

This development aligns with recent shifts in the broader Glasgow Financial Alliance for Net Zero (GFANZ), which recently restructured to focus on mobilizing capital for the low-carbon transition. GFANZ now welcomes participation from firms outside its coalitions, reflecting an adaptive approach to advancing sustainability.

The exits underscore the tension between political dynamics and financial institutions’ climate commitments, marking a pivotal moment for ESG-focused alliances worldwide.