The Net-Zero Banking Alliance (NZBA) announced on 27/8 that it is proposing members vote to transition from an “alliance” model with binding commitments to a “framework initiative” with a more flexible structure.
Formed in 2021 by the United Nations, the NZBA is a group of leading global banks committed to aligning their lending, investment, and capital markets activities with net-zero greenhouse gas emissions by 2050.
After rapidly expanding from 43 banks to over 140, representing $74 trillion in 2024, NZBA members have been under considerable pressure, particularly from Republican politicians in the US following Donald Trump's re-election as president.
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People walk past bank signs along a road in New Delhi, India, on 25/11/2015. Photo: Reuters |
People walk past bank signs along a road in New Delhi, India, on 25/11/2015. Photo: Reuters
These politicians have accused financial institutions, including banks, insurers, asset managers, and investment firms, of potentially violating the law by participating in “climate gangs,” where environmental and financial groups allegedly collude to promote decarbonization.
The exodus from the NZBA began late last year with Goldman Sachs’ departure. Within weeks, other major Wall Street banks followed suit: Wells Fargo, Bank of America, JPMorgan Chase, and then Canadian counterparts also left the alliance.
Following the departure of the North American banks, the NZBA adopted significant changes to its framework and operating principles in April. This included dropping the requirement for member banks to align their financing activities with the goal of limiting global warming to 1.5°C.
These changes did not prevent HSBC from leaving in July. In August, UBS and Barclays also decided to withdraw. "With the departure of most global banks, the alliance no longer has enough members to support our transition," Barclays stated.
The wave of departures from the NZBA began with US banks in late 2024, coinciding with Donald Trump’s presidential victory. Departing members included Goldman Sachs and Citigroup.
With this proposed transition, the NZBA believes this is the most appropriate model to continue supporting global banks in maintaining resilience and accelerating the real economy's transition in line with the Paris Agreement. Member voting is expected to conclude by the end of September.
The NZBA is part of a group of climate-focused financial alliances that have faced political pressure in recent months. Other alliances include: the Net Zero Asset Managers initiative (NZAM), the Net-Zero Asset Owner Alliance (NZAOA), and the Net-Zero Insurance Alliance (NZIA).
The NZIA ceased operations in 2024, while the NZAM also announced a pause in key activities earlier this year to adapt to the changing political and legal environment.
Bao Bao (ESG Today, Reuters)
