Canadian banks exit Global Climate Coalition prior to Trump's inauguration

TD Bank, the Bank of Montreal, the National Bank of Canada, and CIBC exit the Net-Zero Banking Alliance, aligning themselves with prominent U.S. banks.

On Friday, four of Canada's top banks declared their exit from the Net-Zero Banking Alliance (NZBA), a global coalition focused on tackling climate change.

TD Bank, Bank of Montreal (BMO), National Bank of Canada, and Canadian Imperial Bank of Commerce (CIBC) are among the Canadian banks departing the initiative, joining six major U.S. banks.

This decision follows Goldman Sachs' withdrawal on December 6, just days before President-elect Donald Trump's inauguration.

Trump has openly opposed government-initiated climate-change policies.

Launched in 2021 by former Bank of Canada Governor Mark Carney, the Net-Zero Banking Alliance is a UN-supported initiative encouraging financial institutions to reduce their carbon emissions, aiming for net-zero.

The alliance strives to align the financial sector with the Paris Climate Agreement targets.

In their statements, the Canadian banks mentioned they now wish to pursue their climate strategies independently of the alliance.

CIBC noted that while the NZBA played a crucial role upon its inception, the bank has made substantial progress in addressing climate issues with its clients.

This shift reflects a changing approach as banks increasingly prioritize climate risk management, following Canada's banking regulator's guidelines.

The exits also align with a wider trend of financial institutions reevaluating their engagement in climate-focused initiatives, with the U.S. Federal Reserve also withdrawing from a global group exploring climate risk in the financial system.

The NZBA was established when the global banking industry was heightening its climate efforts.

The impact of these major banks' departure on the coalition’s future direction and the wider financial institutions' drive to address climate risks remains to be seen.