The Net Zero Banking Alliance (NZBA), a landmark coalition of global banks aiming for carbon neutrality, has been formally disbanded. The group, which had been bleeding members for months, confirmed that it would cease to operate immediately. The decision marks a significant blow to the idea that the financial industry can regulate itself on climate issues.
The alliance’s fate was sealed by a dramatic shift in the political landscape, specifically the re-election of Donald Trump in the United States. His vocal support for the fossil fuel industry and his administration’s hostility towards environmental, social, and governance (ESG) principles created an untenable situation for the American banks that formed the core of the NZBA.
Facing the threat of “anti-woke” political and legislative attacks, Wall Street’s six largest banks—including Citigroup and Morgan Stanley—made a collective exit late last year. This move was seen as a defensive maneuver to appease right-wing politicians, but it effectively decapitated the global alliance and set off an unstoppable chain reaction of departures.
Soon after, international banks began to follow suit. The credibility of the alliance was further eroded when European giants like HSBC and Barclays also withdrew their membership. For HSBC, the decision aligned with its recent move to delay its own climate targets by 20 years, indicating a broader corporate retreat from ambitious environmental commitments.
The demise of the NZBA has left sustainable investment campaigners with mixed feelings. Some are deeply disappointed, viewing it as a surrender by the banking industry at a critical moment for the planet. Others, however, are relieved, arguing that the alliance was little more than a greenwashing tool. They contend that its failure underscores the absolute necessity of imposing strict, legally binding regulations on banks to end their financing of fossil fuel projects.