Sumitomo Mitsui Becomes First Japanese Bank to Exit Net Zero Banking Alliance

Sumitomo Mitsui Financial Group (SMFG), Japan’s second largest bank, revealed that it has decided to exit the Net-Zero Banking Alliance (NZBA), further expanding what had been a primarily North America-focused series of exits from the UN-backed coalition of banks dedicated to advancing global net zero goals through their financing activities.

In statements to media outlets, SMFG said that its decision was made in light of “international trends,” and that despite leaving the group, it would leave its climate commitments unchanged.

SMFG joined the NZBA in 2021, and the firm has put in place a series of climate commitments, including goals to achieve net zero operational Scope 1 and 2 emissions by 2030, and for its entire loan and investment portfolio by 2050.

Members of the NZBA commit to transitioning operational and attributable greenhouse gas (GHG) emissions from their financing activities to align with net zero pathways by 2050, and to set 2030 financed emissions targets, initially focused on key emissions intensive sectors. After rapidly expanding from 43 banks at launch in 2021 to over 140 banks representing $74 trillion in 2024, members of the group have come under significant pressure, particularly from Republican politicians in the U.S., who have been warning financial institutions including banks, insurers, asset owners and investors of potential legal violations from their participation in climate-focused alliances and of plans to exclude the companies from state business, as part of a broader anti-ESG political campaign.

Shortly after the election of Donald Trump, U.S.-based banks began departing the group, beginning with Goldman Sachs, and ultimately including every major Wall Street bank. In January, all major banks in Canada announced that they would leave the NZBA, and last month Australian financial group Macquarie departed as well. SMFG is the first Japanese bank to exit the NZBA.