The Net Zero Banking Alliance (NZBA) has paused all of its activities. The UN-backed coalition, which aims to push the financial sector toward net zero emissions, announced the move last week after several European and Americans giants ended their membership because of the changed political climate.
Founded in 2021, the NZBA counted around 120 banks from 40 countries, including major American and European players in the global financial system, such as Goldman Sachs and BNP Paribas. These institutions jointly pledged to align their lending and investment portfolios with net zero emissions by 2050, and to limit global warming to no more than 1.5°C. It produced guidance on climate risk disclosure, sectoral decarbonisation targets, and methodologies for tracking financed emissions.
But since the end of 2024, the alliance has been hit by a wave of high-profile departures, such as JPMorgan Chase, Bank of America and the National Canadian Bank. After the departure of large American and Canadian financial institutions, some European banks, such as HSBC, UBS, and the Dutch Triodos Bank, followed suit. Together, the banks that left in late 2024 and early 2025 represent 22 per cent of the alliance’s combined assets, and 12 per cent of the assets of the global banking system.
Changed political climate
Although none of the departing banks have made this explicit, experts point to the change in political climate as the reason for the departures. Shortly after returning to office, US President Donald Trump pulled his country out of the Paris Agreement. He also froze the disbursement of funds under the Inflation Reduction Act and the Bipartisan Infrastructure Law, together worth $280bn in green infrastructure loans. He also suspended new offshore wind leases, launched a review of existing wind projects, and scaled back federal support for clean energy while boosting oil and gas development.
Banks in the alliance subsequently faced legal threats against their commitment to climate neutral investments, citing for example potential breaches of competition law. This pressured members to leave, Paddy McCully, senior analyst at NGO Reclaim Finance, told Euronews.
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Softened commitments
Under these pressures, the NZBA softened some of its commitments. In April, members voted to drop the commitment to stay below 1.5°C as a global warming limit. Instead, they opted for the broader goal of staying “well below 2°C”. The decision followed reports that more banks were threatening to quit the alliance unless the rules were eased.
Yet, that was also a reason for some other banks to leave. Triodos Bank, a Dutch ethical lender, left the alliance earlier this year, saying it could no longer justify staying if climate targets were only “encouraged” rather than mandatory. “More lenient guidance significantly undermines the effectiveness of the NZBA,” the bank said. “In the current situation, Triodos Bank does not believe it can still effectively influence the NZBA and its members.”
New structure
The alliance now plans to transition into a new organisational structure. Until members vote on this proposal, its work is frozen. With significant players having already left the alliance, changing into an advisory body may be the only way for the group to remain relevant. If the advisory model is adopted, the NZBA would focus on facilitating knowledge-sharing and guidance rather than enforcing binding commitments.
Critics, however, worry this will leave the group toothless. Without strong political and policy support for the green transition, fossil fuel projects have once again become more profitable at the expense of renewable investments.
More lenient guidance significantly undermines the effectiveness of the NZBA. — Triodos Bank
Nonetheless, institutions like the European Central Bank have warned that banks which neglect green investments expose themselves to higher long-term threats. Climate-related shocks pose a direct danger to financial stability. If lenders scale back on clean energy investment now, they may secure short-term profits but at the cost of greater vulnerability later. In that sense, banks still have a financial incentive to stay on the green path, even without a political agenda supporting them.
What’s next
The NZBA Steering Group is now holding a formal voting procedure to decide whether to transform the alliance into a guidance-focused initiative rather than a membership-based coalition. The results will be made public at the end of September.
