Major Banks Withdraw from Global Climate Coalition Amid Policy Debates

Four major Canadian banks have joined six U.S. counterparts in exiting the Net-Zero Banking Alliance. The move follows increasing scrutiny and evolving strategies regarding climate policies, with Donald Trump's upcoming return to the White House adding pressure. Despite withdrawing, the banks maintain their commitment to developing independent climate strategies.

In a significant shift, four of Canada's largest banks have exited a global climate coalition, aligning with six major U.S. banks in stepping back from the Net-Zero Banking Alliance. This move is seen amid a backdrop of growing scrutiny on financial institutions' roles in climate change mitigation.

The exits from the alliance, which was established by former Bank of Canada Governor Mark Carney to encourage climate-conscious banking practices, were marked by Goldman Sachs' initial departure. The timing coincides with political dynamics in the U.S., as Donald Trump prepares to reassume the presidency, having previously criticized prescriptive climate-change efforts.

While Canadian banks like TD Bank, Bank of Montreal, National Bank of Canada, and the Canadian Imperial Bank of Commerce express confidence in pursuing climate strategies independently, they face regulatory pressures to address climate-related risks. Concurrently, the U.S. Federal Reserve has retracted from a global assembly of central banks focused on climate risk management, indicating shifts in the global financial regulatory landscape.

(With inputs from agencies.)