The Net-Zero Banking Alliance (NZBA), a coalition of over 120 global banks united by a shared commitment to achieve net-zero greenhouse gas emissions by 2050, has entered a new chapter. Following an overwhelming vote by its members, the Alliance has adopted a renewed mandate designed to provide stronger support for banks and enhance their engagement with real economy sectors that are critical to decarbonization.
This vote marks the end of a year-long strategic review, during which NZBA members provided input on how the Alliance should evolve in light of shifting regulatory, market, and climate landscapes. Since its launch in 2021, the NZBA has supported banks in aligning their portfolios with the Paris Agreement, notably through its Guidance for Climate Target Setting for Banks, which has helped over 100 members establish independent, sector-specific targets aligned with limiting global warming to 1.5°C.
As the climate crisis accelerates and the global economy responds with new regulations and expectations, financial institutions find themselves at the frontlines of change. The revised framework adopted by NZBA reflects this new reality. It introduces increased levels of support for member banks as they implement their individual climate strategies, while recognizing the complexity of managing transition risks across diverse portfolios. It also prioritizes deeper collaboration between banks and their clients, aiming to address barriers to green growth and promote investment in low-carbon solutions.
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According to Shargiil Bashir, Chair of NZBA and Chief Sustainability Officer at First Abu Dhabi Bank, the update couldn’t be timelier. “We are halfway through the critical decade for action on climate, and we need all sectors, including banking and finance, to commit to moving the needle on emissions reductions,” he said. “As the largest global initiative specifically focused on supporting climate mitigation action by banks, NZBA is uniquely positioned to provide practical support to banks navigating the net-zero transition.”
One of the most significant aspects of the renewed framework is its acknowledgment of the varying regulatory environments in which banks operate. While some jurisdictions now mandate detailed climate disclosures and transition plans, others are still developing these frameworks. The NZBA’s updated guidance allows for this diversity, offering banks in less-regulated regions—like many in Africa—a credible and globally recognized reference point for climate action. At the same time, it ensures that banks in more advanced regulatory markets can continue to meet their obligations while benefiting from collective learning and shared tools.
Another major shift lies in the broader acceptance of a range of net-zero pathways. While many NZBA members already anchor their strategies to 1.5°C low or no-overshoot scenarios, the new approach provides flexibility to banks operating in markets where transition timelines may differ due to development needs or resource constraints. This flexibility is especially relevant for African banks, many of which finance sectors such as energy, agriculture, and manufacturing—areas where decarbonization is both complex and urgent. Recognizing context-specific challenges and solutions is a step forward in making global climate action more inclusive and realistic.
The revised framework also reinforces the accountability of banks to a wide range of stakeholders, including shareholders, regulators, and society. As public scrutiny intensifies and greenwashing concerns persist, the need for transparency and measurable progress is more critical than ever. The NZBA offers a platform for knowledge sharing, peer learning, and capacity building, which are essential for banks looking to move from commitment to action.
For African banks, this renewed mandate presents more than just compliance guidance—it is an opportunity to lead. The continent faces a unique dual challenge: rapidly expanding its economies to lift people out of poverty while doing so in a climate-resilient and sustainable way. Financing this transition will require innovation, long-term vision, and strong partnerships between banks, businesses, and governments. The NZBA’s push for deeper client engagement is a valuable blueprint for how banks can drive change from within, by working directly with companies to develop realistic, investable transition plans.
Moreover, aligning with NZBA principles can enhance the credibility of African financial institutions in the eyes of international investors and development finance institutions. As the global appetite for sustainable investments grows, particularly in emerging markets, banks that can demonstrate climate alignment may gain access to concessional capital, blended finance mechanisms, and green bonds—tools that can amplify their impact on the ground.
The evolution of the NZBA comes at a time when momentum for sustainable finance in Africa is building. From Kenya’s leadership in green bonds to South Africa’s Just Energy Transition Investment Plan, there is increasing political and institutional will to address climate change in ways that support inclusive growth. The role of banks is central to this effort. By financing clean energy projects, supporting climate-smart agriculture, and investing in resilient infrastructure, banks can shape the trajectory of Africa’s development for generations to come.
Looking ahead, the effectiveness of the NZBA’s new phase will depend on how its principles are implemented. It will require sustained commitment, internal capacity building, and a willingness to embrace innovation. The updated framework lays the foundation, but the hard work of aligning portfolios with climate goals lies with individual banks. For African institutions, the challenge is real—but so is the opportunity to lead in shaping a green and inclusive financial future.
As climate urgency meets economic ambition, the Net-Zero Banking Alliance’s renewed focus offers banks on the continent a chance not only to respond to global expectations but to redefine them on their own terms.
