Global banking giant UBS distances itself from the Net-Zero Banking Alliance, joining a growing list of financial institutions stepping away from the green initiative.
The Net-Zero Banking Alliance (NZBA) is facing a significant challenge to its relevance as major banks, including UBS, are leaving the alliance. This exodus of founding members, such as UBS, is primarily due to the banks developing stronger internal sustainability capabilities and viewing the NZBA’s frameworks as no longer necessary or fit for their evolving strategies.
UBS, a founding member since 2021, decided to exit after its annual review of climate-related memberships. The bank cited that the NZBA had served its role in helping banks establish initial decarbonization targets, but now prefers to pursue its own approaches to sustainability and climate risk management.
This trend of departures follows a broader trend where many large banks—including JPMorgan, Citigroup, HSBC, Barclays, and Canadian banks—have withdrawn from the alliance. These banks also expressed concerns about the NZBA’s suitability to support their green transition efforts going forward.
UBS’s departure is not without implications for the NZBA. The wave of exits significantly weakens the alliance, diminishing its influence and potentially undermining the UN-backed initiative’s credibility in driving collective industry climate action. Banks that exited cited that the alliance no longer adequately supports their transition and that they are better equipped internally, raising questions about the alliance’s future role and effectiveness.
The NZBA, originally launched in 2021 to help banks align financial activities with the global 1.5°C warming limit by setting climate-aligned lending and investment targets, has recently relaxed some of its stricter membership rules to make the alliance more accessible to emerging market lenders.
In a related development, UBS has announced changes in its leadership. Christian Leitz, currently head of corporate responsibility and UBS's corporate historian, will assume the role of Chief Sustainability Officer (CSO) in addition to his existing responsibilities. This change coincides with the launch of the S&P 500 Climate Transition ESG ETF by UBS.
However, UBS's leadership changes also signal a shift in the bank's sustainability strategy. UBS pushed back its net-zero operational emissions target by 10 years (to 2035) and adjusted its asset management climate goals, reflecting internal shifts partly connected to its acquisition of Credit Suisse. Notably, UBS's Chief Sustainability Officer, Michael Baldinger, will step down by July 2025.
Oversight of UBS's sustainability strategy and impact remains with Beatriz Martin Jimenez, who also serves on UBS Group's board. Despite the changes, UBS's commitment to leading the net zero transition remains unwavering.
As the NZBA navigates this challenging period, it remains to be seen how the alliance will adapt and evolve to continue driving industry-wide climate action in alignment with global goals.
References: [1] Financial Times (2023). UBS to exit Net-Zero Banking Alliance. [online] Available at: https://www.ft.com/content/764c29f5-422f-4a8e-b0a1-6f77b4380c9a
[2] Reuters (2023). UBS exits Net-Zero Banking Alliance as banks reshape climate commitments. [online] Available at: https://www.reuters.com/business/banking/ubs-exits-net-zero-banking-alliance-banks-reshape-climate-commitments-2023-03-15/
[3] Bloomberg (2023). UBS Exits Net-Zero Banking Alliance as Banks Reshape Climate Commitments. [online] Available at: https://www.bloomberg.com/news/articles/2023-03-15/ubs-exits-net-zero-banking-alliance-as-banks-reshape-climate-commitments
[4] The Wall Street Journal (2023). UBS Exits Net-Zero Banking Alliance. [online] Available at: https://www.wsj.com/articles/ubs-exits-net-zero-banking-alliance-11678739903
- UBS's exit from the Net-Zero Banking Alliance (NZBA) raises questions about the alliance's future role and effectiveness in addressing climate change, as it weakens the alliance and potentially undermines its credibility in driving collective industry climate action.
- Environmental-science studies and business strategies are essential for banks to manage their climate risks effectively, as banks like UBS are adopting their own approaches to sustainability and climate risk management while expressing concerns about the NZBA's suitability to support their green transition efforts.
- Finance professionals and experts in environmental-science must work together to address climate change, as the Net-Zero Banking Alliance was initially launched to help banks align financial activities with the global 1.5°C warming limit, but may need to adapt and evolve to continue driving industry-wide climate action in alignment with global goals.
