The Net Zero Banking Alliance (NZBA), a flagship initiative for climate action in the financial world, has collapsed. Its immediate shutdown was announced after a tumultuous period that saw its membership plummet from a peak of nearly 150 global banks. The remnants of the alliance will be a set of publicly accessible documents, but the organization itself is defunct.
This demise has reignited a fierce debate about the effectiveness of voluntary corporate climate pledges. Critics like Lucie Pinson of Reclaim Finance expressed no sorrow, stating the NZBA “was doomed to fail” because its real purpose was to “create the illusion of measures” rather than drive genuine change. Pinson argues the shutdown simply exposes the reality that voluntary efforts are insufficient to shift capital away from fossil fuels.
The beginning of the end for the NZBA can be traced to Donald Trump’s re-election. His aggressive pro-fossil fuel agenda and the associated “anti-woke” political movement in the US put immense pressure on member banks. To insulate themselves from political attacks, six of the largest American banks, from Citigroup to Morgan Stanley, quit the alliance in rapid succession.
Their exit triggered a global retreat. Lenders in Europe and Japan soon followed, questioning the value of an alliance deserted by its most powerful members. The departure of UK giants HSBC and Barclays this summer served as the final nails in the coffin, signaling that the momentum for collective, voluntary action had been irrevocably lost.
While some sustainable investment campaigners are “bitterly disappointing,” seeing the shutdown as a failure of leadership, others see it as a pivotal moment. The focus now shifts squarely to policymakers and regulators. Activists argue that without government mandates to end the financing of fossil fuel expansion, the financial industry will never align its practices with the urgent reality of climate change.