Key Impact Points:
- Expansion of Scope: The Net-Zero Banking Alliance (NZBA) has broadened its target-setting guidelines to include emissions from capital market activities, specifically underwriting, known as Facilitated Emissions.
- Leadership and Governance: MUFG leads the new working group within NZBA, underlining its commitment to steering global banks towards carbon neutrality in capital markets.
- Strategic Timelines Set: Banks are required to establish their Facilitated Emissions targets by November 1, 2025, ensuring a structured approach to achieving net-zero emissions by 2050.
NZBA and MUFG’s Strategic Role
The NZBA, initiated by the United Nations Environment Programme Finance Initiative in April 2021, now encompasses 145 banks globally committed to aligning their financing to support a 1.5°C global temperature goal. MUFG, a pivotal member of the NZBA’s Steering Group and a trailblazer in Japan, has been at the forefront in guiding the alliance’s governance and strategic initiatives.
Enhancing Emissions Targets
In a significant update, April 2024 marked the release of the revised “Guidelines for Climate Target Setting for Banks.” This new edition now incorporates targets for Facilitated Emissions, a crucial aspect given the significant impact of underwriting activities on banks’ carbon footprints. “Including Facilitated Emissions in our target setting aligns with our broader commitment to a sustainable finance framework that encompasses all aspects of banking services,” stated an NZBA spokesperson.
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Forward-looking Initiatives by MUFG
MUFG has actively led the charge in developing frameworks for transition finance. By chairing the NZBA Transition Finance Work Track, MUFG spearheaded the publication of key resources like the NZBA Transition Finance Guide and the Discussion Paper on Developing Metrics for Transition Finance. Their leadership extends to chairing a newly formed working group in 2024, dedicated to establishing actionable targets for Facilitated Emissions following the PCAF Standard for Facilitated Emissions released in December 2023.
The establishment of concrete deadlines for target setting by November 2025 underscores the urgency and the structured approach the NZBA and its member banks are adopting to meet their net-zero ambitions effectively.
