Net-Zero Banking Alliance (NZBA)

Prelims: Current events of national and international importance

Why in news?

The NZBA announced its shutdown, citing political pressure and departure of its members.

NZBA – A voluntary, industry-led coalition backed by UN initiative seeking carbon-neutral investments by banks.
Launched in – 2021.
Under– The UN Environment Programme Finance Initiative (UNEP FI)
Aim – To get banks to slash the carbon footprint of their loans and investments and help drive the transition to a net-zero economy by 2050.
Support – It was supported up to 150 banks to develop independent and individual climate-related business strategies and to set more than 500 sectoral net zero targets.
Key actions of NZBA –
- Transition operational and financed emissions to align with net-zero pathways by 2050.
- Set and publish long-term and intermediate decarbonization targets.
- Annually publish absolute emissions and emissions intensity to track progress against their targets.
- Disclose their progress and a board-level reviewed transition strategy within one year of setting targets.
Reasons for alliance's collapse – NZBA dissolved under mounting political pressure, wave of member withdrawals, inconsistent commitments, weak governance, non-binding obligations of NZBA, etc.

Quick Facts

United Nations Environment Programme Finance Initiative (UNEP FI)

Partnership – Between the UNEP and a network of over 450 financial institutions, including banks, insurers, and investors.
Established in – 1992
It brings together a large network of banks, insurers and investors that catalyzes action across the financial system to deliver more sustainable global economies.
It was the 1^st organization to engage the finance sector on sustainability and incubated the Principles for Responsible Investment.

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