The Net-Zero Banking Alliance (NZBA), once a flagship coalition under the UN’s climate finance umbrella, has announced a pause in its operations following a cascade of high-profile exits and rising political pressures. Initially envisioned as a united global banking front to push the financial sector toward net zero emissions by 2050, the NZBA is now undergoing a fundamental restructuring and may soon abandon its model as a membership-based alliance altogether.

From Expansion to Uncertainty: A Rapid Shift in Trajectory

Launched in 2021 with only 43 banks, the NZBA quickly grew to over 140 members by 2024, representing a staggering $74 trillion in combined assets. These financial institutions had committed to aligning their lending portfolios and operations with pathways compatible with limiting global warming to 1.5 degrees Celsius. Over time, the scope of the NZBA’s commitments expanded. In April 2024, the alliance issued new guidelines that required members to extend their net zero alignment beyond lending and into capital markets activities such as debt and equity underwriting.

However, this broadened scope brought intensified scrutiny, particularly in the United States. A coordinated campaign led by Republican officials warned banks, insurers, and asset managers that involvement in climate-focused alliances could result in legal consequences or exclusion from public contracts. As anti-ESG sentiment grew in U.S. political circles, the NZBA’s unity began to falter.

Wall Street Walkout and the Domino Effect

In December 2024, Goldman Sachs became the first major bank to exit the NZBA, marking the start of a rapid unraveling among its North American members. Within weeks, other major Wall Street firms followed suit, triggering a wave of resignations from Canadian banks in early 2025. To stem the exodus, the NZBA implemented significant revisions to its principles in April, including removing the requirement for members to align both lending and capital markets operations with the Paris Agreement’s 1.5°C target.

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While these changes slowed the immediate rate of departures, they did not restore confidence. During the summer of 2025, the alliance suffered further blows when HSBC, UBS, and Barclays each announced their departure. Barclays, in particular, cited the exit of other major global banks as the reason the alliance could no longer support its climate transition efforts.

Proposed Overhaul: A Framework Without Formal Membership

In response to this growing instability, the NZBA has proposed a dramatic shift in its structure. Rather than continue as a coalition of members, it may instead transition into a non-binding framework or guidance body for banks wishing to voluntarily align with net zero goals. A vote among remaining member banks is currently underway to decide the alliance’s future, with results expected at the end of September.

According to the NZBA’s Steering Group, this shift would allow the organization to better support banks globally as they pursue climate resilience, while reducing exposure to political backlash. The alliance emphasized that its primary mission to provide banks with tools, resources, and guidance for a transition aligned with the Paris Agreement remains unchanged.

The Collapse of a Broader Climate Finance Coalition

The NZBA is not the only UN-backed financial initiative facing significant upheaval. Its formation was part of a larger network of alliances brought together under the Glasgow Financial Alliance for Net Zero (GFANZ). These included the Net Zero Asset Managers initiative (NZAM), the Net Zero Asset Owner Alliance (NZAOA), and the Net-Zero Insurance Alliance (NZIA). However, all of these coalitions have experienced turbulence.

The NZIA dissolved in 2024 after mass withdrawals. NZAM, once a pillar of climate-aligned asset management, recently suspended its main activities as it re-evaluates its strategy in light of shifting political and regulatory landscapes. GFANZ itself has since restructured to focus less on alliance governance and more on accelerating private capital flows into low-carbon and transition investments.

Navigating Political Headwinds and Investor Expectations

The unraveling of the NZBA and its peer alliances reflects a new era of climate finance marked by political resistance and competing stakeholder demands. For banks, aligning with net zero remains a long-term objective, but the institutional architecture to support this transition is being reshaped. Some institutions are distancing themselves from prescriptive memberships in favor of flexible, voluntary pathways that avoid regulatory and political backlash.

Despite the ongoing turbulence, NZBA leadership has reiterated its encouragement for banks to uphold their net zero commitments. In a public statement, the alliance stressed the importance of resilience and continuity, urging banks not to lose sight of the broader goal of transforming the real economy to meet climate targets.

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What Comes Next for Climate Finance Leadership?

As the September vote approaches, the banking sector is watching closely. The outcome will likely influence how future coalitions and frameworks are structured, and whether voluntary sustainability guidance can offer the same momentum and accountability as formal alliances. What began as a collective effort to reshape banking’s role in climate action is now a test case for how to navigate political backlash without abandoning environmental ambition.

The NZBA’s transition could mark the end of an era but also the beginning of a new, more adaptable approach to mobilizing climate finance.

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