Saturday, 11 October 2025
Net-Zero Banking Alliance Faces Uncertainty as EU Banks Weigh Exits The Net-Zero Banking Alliance (NZBA), once a symbol of financial sector commitment to decarbonisation, is facing mounting pressure as speculation grows that several European Union banks may follow Wall Street peers in leaving the coalition. What Is the NZBA? The NZBA was launched in 2021 […]
The Net-Zero Banking Alliance (NZBA), once a symbol of financial sector commitment to decarbonisation, is facing mounting pressure as speculation grows that several European Union banks may follow Wall Street peers in leaving the coalition.
The NZBA was launched in 2021 to align banks’ lending and investment portfolios with the goal of reaching net-zero greenhouse gas emissions by 2050, consistent with the Paris Agreement. The alliance initially required members to align their financing with efforts to limit global warming to 1.5°C, but that requirement has since been dropped amid rising political pressure and member exits.
At its peak, NZBA was celebrated by bank executives at the COP26 climate summit in Glasgow, and membership grew rapidly. As of mid-2025, the alliance still counts 125 banks representing $41 trillion in assets, according to its website. However, a wave of withdrawals and internal doubts has called its long-term future into question.
The alliance’s recent troubles stem in part from a political backlash in the United States, where some Republican lawmakers have labelled NZBA and similar groups as part of an “anti-oil” agenda. Legal threats, blacklists, and broader conservative criticism of ESG (Environmental, Social, and Governance) policies have pressured US-based banks to withdraw.
Barclays Plc and HSBC Holdings Plc, both UK-based but with significant US operations, exited NZBA earlier this year. Their decisions were quickly followed by UBS Group AG of Switzerland, intensifying speculation that EU-based members may be next.
Despite strong environmental policies in the EU, several large European banks are now reportedly re-evaluating their NZBA memberships. According to sources familiar with internal discussions:
BNP Paribas SA, the EU’s largest bank by assets, was debating the value of continued participation as recently as June 2025, although a final decision was postponed.
Deutsche Bank AG said it is “monitoring current developments” and reaffirmed its own net-zero goals.
Banco Santander SA reiterated its net-zero commitment but declined to confirm continued NZBA membership.
UniCredit SpA and Commerzbank AG both restated their climate targets and said they’re observing market and regulatory trends.
If any of these banks exit, it would mark the first EU-based withdrawals from NZBA, considered a significant blow to the group’s credibility.
Executives previously cited peer access within the alliance as a reason to stay. But with key institutions like Barclays and HSBC gone, that benefit is fading. As Barclays noted, the alliance “no longer has the membership to support our transition.”
The erosion of NZBA support is not necessarily a rejection of climate goals. Departing banks, including UBS and HSBC, have stressed that their commitment to sustainability remains unchanged. HSBC said it arranged $54.1 billion in sustainable finance deals in the first half of 2025, a 19% year-on-year increase.
Still, critics argue that the shift reflects a deeper governance problem in climate coalitions. Lisa Sachs, head of Columbia University’s Centre on Sustainable Investment, says financial institutions are not equipped to lead climate transitions, since their focus is on maximising returns under current market conditions, not driving systemic change.
“A fundamental truth is that financial institutions follow markets — they don’t create them,” Sachs said.
She added that frameworks like NZBA may overestimate the impact banks can have simply by setting targets and nudging clients to decarbonise.
Exiting the alliance has sparked criticism from investors and clients. The Church of England Pensions Board, a shareholder in both Barclays and HSBC, has begun “engaging” with the banks on their decision to leave.
“It is very clear that some banks simply are not prepared to stay the course on their own commitments long term,” said Laura Hillis, the board’s director of responsible investment. “Which points to governance issues.”
Ironically, NZBA’s troubles coincide with a decline in fossil-fuel financing. Bloomberg data shows that financing for oil, gas, and coal projects by Wall Street’s top six banks fell 25% in 2025 (as of August 1) compared to the same period in 2024, reaching $73 billion.
The drop is partly driven by policies that increase supply and lower energy prices, making upstream fossil fuel development less attractive.
While some Northern European banks remain committed, such as ING, ABN Amro, Swedbank, SEB, and Danske Bank, the alliance’s trajectory is uncertain. With fewer members and diluted requirements, NZBA has shifted from a standards-setting body to more of a support network.
A spokesperson for NZBA said the group continues to back its members through “long-term work that requires courage, consistency and true leadership to stay on track, even when faced with barriers to action.” But without broad membership and firm commitments, observers are questioning whether the alliance can still deliver on its founding promise.
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