The Bank of Montreal (BMO) has become the first Canadian bank to exit the Net-Zero Banking Alliance (NZBA), a UN-sponsored organization formerly under the broader umbrella of Liberal leadership candidate Mark Carney.
Also on Friday, National Bank, TD Bank Group and CIBC followed suit by confirming they were no longer members.
BMO, the third largest of Canada’s so-called ‘Big Five’ chartered banks, announced on Friday it is formally withdrawing from the United Nations-led initiative aimed at aligning global banking practices with net-zero greenhouse gas emissions by 2050.
It comes just one day after Carney announced his intention to seek the Liberal leadership in Edmonton on Thursday.
As the former co-chair of the Glasgow Financial Alliance for Net Zero (GFANZ), which oversees the NZBA, Carney spearheaded efforts to transition financial systems away from fossil fuels toward so-called ‘sustainable energy’ projects.
He resigned from his GFANZ role prior to entering the leadership race, but his tenure continues to shape the political narrative around his candidacy.
BMO stated that while it is no longer part of the NZBA, its commitment to climate action remains firm. “We are 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 in a statement.
The move comes weeks after BMO CEO Darryl White emphasized that the bank would maintain its net-zero goals, regardless of the mechanisms or alliances used to achieve them.
“We absolutely have a commitment to climate transition,” White said. “We also have a commitment, particularly here in Canada, to our legacy energy customers, and we will not abandon that.”
BMO joins a growing list of major US banks — including JPMorgan Chase, Morgan Stanley, and Bank of America — that have withdrawn from the NZBA. The departures reflect broader tensions between climate goals and the financial industry’s relationships with fossil fuel clients, particularly in North America.
The decision by BMO has also reignited debate about the effectiveness of voluntary climate alliances like the NZBA. But that view isn’t shared by others in the Canadian banking sector.
Dave McKay, CEO of the Royal Bank of Canada (RBC), suggested that membership in such organizations is not the only pathway to achieving net-zero targets. “Pulling out of the alliance doesn’t lead to non-commitment,” he said. “It just means that mechanism… maybe is not the right one to do it.”
RBC, Canada’s largest bank, remains a member of the NZBA as of January 17, though some industry insiders question how long Canadian banks will stay aligned with the UN initiative.
As co-chair of GFANZ from its inception in 2021 until his recent resignation, Carney worked to position the global financial sector as a key player in combating climate change. The organization, which includes the NZBA as one of its subgroups, sought to drive private capital away from fossil fuels and toward renewable energy investments.
The NZBA requires members to align lending and investment portfolios with net-zero pathways by 2050, with interim 2030 targets focusing on the most greenhouse gas-intensive sectors, including Canada’s oil and gas industry.
The alliance has faced backlash from banks concerned about the feasibility of these targets, especially in energy-dependent economies like Canada and specifically investment in Alberta‘s energy sector.
However, Carney — speaking as chairman of Brookfield Asset Management — in July 2023 insisted investment in the Canadian oil industry was still necessary to promote his climate agenda.
“There still does need to be some investment in fossil fuels,” the Canadian Energy Centre reported. “A lot of the skills that helped build the oil sands, for example, are exactly the types of skills that we need to make the oil sands low cost as well as building out a hydrogen economy.”