Finance
Banks in Canada Bail on Mark Carney’s Net-Zero Banking Alliance
Four of Canada’s largest banks have exited the UN-supported Net-Zero Banking Alliance (NZBA), a climate-focused initiative launched by former Bank of Canada governor Mark Carney, currently a candidate for the Liberal Party’s leadership. The program aims to encourage financial institutions to take stronger climate action.
BMO, National Bank, TD Bank Group, and CIBC confirmed on Friday they are no longer part of the NZBA.
These exits come after the six biggest banks in the United States also withdrew from similar climate initiatives in recent weeks amid growing political criticism from U.S. Republicans over climate-related policies and the integration of environmental risks into financial strategies.
Earlier this month, BlackRock, the world’s largest asset manager, left the Net-Zero Asset Managers Initiative. Following BlackRock’s departure, the group paused operations and began reviewing its approach, citing recent challenges in the U.S.
While Canadian banks did not cite U.S. political issues as the reason for their decision, they stated they could continue pursuing climate goals without participating in the alliance.
BMO spokesperson Jeff Roman emphasized that the bank remains committed to its climate strategy and helping its clients transition to net-zero emissions. He noted the bank has strong internal systems to adhere to international standards and meet regulatory demands.
National Bank explained it left to simplify how it reports progress on its climate plans. It said it would adopt a practical approach, working with businesses across all industries to reduce emissions.
TD stated it has the resources to advance its climate goals and support clients adapting their operations.
CIBC mentioned the alliance was helpful during the initial phase of global climate efforts but said the financial sector has matured to a point where the bank can operate independently. CIBC spokesperson Tom Wallis said the bank has made meaningful progress with clients and is well-positioned to continue its work outside the NZBA framework.
Canada and other developed nations have committed to achieving net-zero carbon emissions by 2050. However, with the deadline approaching, progress remains uncertain.
Canada’s ‘Net-Zero’ Targets Unrealistic
A recent report from the Fraser Institute highlights how the world’s reliance on fossil fuels has increased significantly over the past 30 years despite international agreements, government policies, and technological advancements.
The study shows that by 2023, global fossil fuel consumption was 55% higher than in 1997. Over the same period, the share of fossil fuels in the world’s energy mix dropped marginally, from 86% in 1997 to about 82% in 2022.
The scale of the upcoming energy transition is massive. During the 19th century, the shift from wood to coal and hydrocarbons eliminated the need for about 1.5 billion tons of wood, roughly equal to 30 exajoules of energy. In comparison, today’s transition will require at least 400 exajoules of new, non-carbon energy sources by 2050.
To offer context from Canada, producing this much clean energy globally would demand approximately 22,000 projects similar in scale to British Columbia’s Site C or Newfoundland and Labrador’s Muskrat Falls.
Supporters of the current push for clean energy often underestimate the complexity and challenges involved. Key sectors like cement, primary iron production, plastics, and ammonia still depend heavily on fossil fuels, and no practical large-scale replacements are available yet.
