Net-Zero Banking Alliance: Guidelines for Climate Target Setting for Banks

“In line with governmental policy commitments and corporate action, financial institutions will need to adjust their business models in the short, medium and long term, and develop realistic strategies underpinned by robust, science-based targets and action plans.

The window for action is small. The consensus of climate scientists is that global warm- ing must be limited to 1.5°C above the preindustrial average by the end of the century to avoid the worst impacts of climate change.1 To achieve this and the goals of the Paris Agreement, emissions must reduce by almost 50% by 2030 and policymakers at COP28 called on parties to “transition away from fossil fuels in energy systems, in a just, orderly and equitable manner, accelerating action in this critical decade, so as to achieve net zero by 2050 in keeping with the science”.2

The role of the banking industry in tackling this challenge is key. While banks alone cannot solve the climate crisis, they can act as part of the broader ecosystem to support the reduction of greenhouse gas (GHG) emissions by engaging with and providing finan- cial solutions, wherever possible, to their clients and partners as they seek to transition to a low carbon economy.

Net-Zero Banking Alliance (“NZBA” or the “Alliance”) members can support govern- ment-led climate strategies by helping their clients in their efforts to reduce real economy emissions. Members do not assume responsibility for achieving outcomes dependent on factors outside of their control, nor directly or indirectly regulate capital flows to any country, sector or industry.

These Guidelines apply to members of the NZBA. The first version of these Guidelines was developed by the members of the Collective Commitment for Climate Action, which has now been retired as it was superseded by the NZBA. These Guidelines have been further developed by the NZBA into the current Version 2, launched in April 2024. These Guidelines are also to be applied by members of the Principles for Responsible Banking that have selected climate mitigation as one of their priority impact areas and should set climate targets within four years of joining.

The Guidelines will be reviewed at least every three years, and sooner when required.”