The Net-Zero Banking Alliance looks set to axe all of its members in an attempt to shake off attacks from US Republicans.
The United Nations-backed body has proposed transforming from a membership organisation into “a new framework initiative”.
The move would allow it to dodge criticism from those who accuse it of enabling banks to break anti-trust laws.
A number of NZBA’s biggest members, including JP Morgan, Bank of America, Goldman Sachs, Citigroup, Morgan Stanley and Wells Fargo, have quit the initiative amid concerns that their participation will result in legal action.
Allegations have centred on their shared commitment to encourage borrowers to reduce their emissions, and a tendency for members to have similar fossil-fuel exclusion policies to each other.
Critics have argued that this could constitute the targeted withdrawal of finance from a specific part of the economy, which is typically in contravention of antitrust laws.
Some have also claimed that making access to capital harder for US coal companies has driven up the price of energy for consumers, which is also not allowed under the rules that govern corporate collaboration.
Investors are experiencing a similar attack in the US, with the Net Zero Asset Managers initiative currently suspended.
Earlier this month, IPE reported that finance officials from 21 US states had written to 25 asset managers expressing “deep concern” over their sustainability efforts, and giving them until next week (1 September) to “demonstrate [their] commitment to a fiduciary model grounded in financial integrity [rather than] political advocacy”.
NZBA said on Wednesday that its steering committee had initiated a vote among its members on whether to “transition from a membership-based alliance to establishing its guidance as a new framework initiative”.
“The Steering Group believes this is the most appropriate model to continue supporting banks across the globe to remain resilient and accelerate the real economy transition in line with the Paris Agreement, as well as to continue engagement with the global banking industry to develop further guidance and tools needed to support them and their clients,” it said in a statement.
The body added that there was still a “major opportunity for banks and key stakeholders to build on the Alliance’s outputs” and urged the banking sector to “remain steadfast” in implementing their net-zero commitments.
Lucie Pinson, director of the campaign group Reclaim Finance, said the announcement demonstrated the limits of voluntary climate pledges, and called on regulators to introduce mandatory rules to get to net zero.
“This is a way for the NZBA to avoid the embarrassment of losing relevance as its largest members gradually withdraw,” she said.
“It is all the more absurd given that the NZBA has never truly challenged the fossil-fuel-oriented business models of major banks.”
The result of the vote will be announced at the end of September. In the meantime, NZBA has paused its ongoing activities.
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