Shareholder advocate ShareAction has criticized the Net Zero Banking Alliance (NZBA) for not doing enough to ensure its members have rigorous and credible climate strategies in place.

In a November 8 announcement, ShareAction released data showing that a third of the banks in the alliance had set “inadequate decarbonization targets” that could compromise the alliance’s commitment to net-zero by 2050.

The data revealed that while the majority of the alliance’s 43 largest financers of fossil fuels have set at least one sector-specific target for reducing their greenhouse gas (GHG) emissions, “crucial gaps remain.”

ShareAction said these gaps include “a lack of interim overarching targets” that cover high-emission sectors such as chemicals and agriculture or capital markets activities. Only seven of the 43 banks analyzed by ShareAction have set interim overarching targets, according to the research.

The shareholder advocate also expressed concern that 80% of the banks’ sectorial targets were set using an emissions intensity metric which it argues can mask the fact that emissions are continuing to grow in absolute terms. Among banks that have set an oil and gas target, over a third – including JPMorgan, NatWest, and Standard Chartered – have set intensity targets.

ShareAction also criticized the NZBA for not requiring the inclusion of capital markets activities such as raising equity and debt financing in the scope of member targets. As such, 25 of the 31 banks that have oil and gas targets exclude these, “despite them typically forming the bulk of financing provided by banks to the oil and gas industry.”

ShareAction Senior Research Manager Xavier Lerin called on the alliance to “demonstrate stronger leadership to keep members on track, for example through compliance monitoring and an accountability mechanism.”

Key recommendations from ShareAction include a request that NZBA members set interim targets for 2030 to set a clearer picture on progress. It also proposed that members that have only set intensity targets should follow the example of banks, such as BMO and Citi, which have set absolute emissions targets for oil & gas.