Major Canadian Banks Withdraw From Global Climate Finance Alliance

The Bank of Montreal building is pictured in Ottawa on June 3, 2024. The Canadian Press/Sean Kilpatrick

Four of Canada’s biggest banks announced they are leaving the global banking sector climate coalition on Jan. 17, joining six major U.S. banks in leaving the pact just ahead of Donald Trump’s inauguration as president on Jan. 20.

The Bank of Montreal (BMO) became the first major Canadian bank to leave the United Nations-backed Net-Zero Banking Alliance (NZBA), followed by TD Bank, National Bank of Canada, and the Canadian Imperial Bank of Commerce (CIBC).

BMO said on Jan. 17 that it remains “fully committed to our climate strategy and supporting our clients as their lead partner in the transition to a net zero world.” The bank said it still had “robust internal capabilities to implement relevant international standards” to support its climate change strategy.

The news came after BMO chief executive Darryl White indicated at a conference earlier this month that the bank would soon leave the alliance. At the same meeting, Royal Bank of Canada chief executive Dave McKay said the alliance was in flux and questioned whether it was the right mechanism to reduce emissions.

The move to leave the alliance comes after U.S. banks Goldman Sachs, Wells Fargo, Bank of America, Citi, Morgan Stanley, and JPMorgan announced they were leaving NZBA, beginning after Trump won the U.S. election on Nov. 5.

Some U.S. Republican politicians have been critical of the alliance, with Rep. Andy Barr saying the alliance is meant to “weaponize the financial system and politicize it to choke off funding to legal fossil energy businesses.”

The United Nations says the purpose of the pact is to “help develop sustainable economies and to empower people to build better futures.”

The NZBA was first launched back in April 2021 to encourage banks to help in efforts to push toward net-zero emissions. Its membership grew from 43 banks to 144 in the three years since, with the majority of them setting sectoral targets as part of their paths to reach net zero greenhouse gas emissions by 2050.

The NZBA was created as part of the Glasgow Financial Alliance for Net Zero, which aimed to bring together financial institutions and other financial services like asset managers and insurers to address the “barriers companies face to scaling decarbonization.”

Then-U.N. Special Envoy on Climate Action and Finance Mark Carney was behind the launch of the Glasgow Alliance. Carney has now launched a bid to become leader of the Liberal Party of Canada and prime minister.

Appearing on the Daily Show with Jon Stewart earlier this week, Carney was asked about U.S. banks leaving the alliance.

“As soon as these big banks got a hold that Donald Trump was going to be back in office, they all bailed,” said Stewart. “They all bailed on all these commitments that they made, and you’re left, in some ways, holding the carbon tax bag. Is that going to make your running more difficult?”

Carney responded that it was only the American banks leaving and that in Canada, we “need to make sure we’re addressing these issues.”

“Because you know what’s going to happen in the United States five years from now? You’re going to care about care about it again. You’re going to have an election,” said Carney.

The Canadian Press and Reuters contributed to this report.