Highlights

• Net-Zero Banking Alliance halts activities after major U.S. and European banks, including JPMorgan, Citi, HSBC and UBS, withdrew.
• Political pressure and lawsuits in the U.S. drive financial institutions away from ESG alliances, raising questions about climate finance.
• Banks pledge to pursue independent climate goals, but investors worry about reduced transparency and accountability without NZBA membership.

The Net-Zero Banking Alliance (NZBA), a United Nations-backed group, has suspended its activities after a wave of bank exits.

The alliance was formed in 2021 and brought together more than 120 banks from 40 countries to align their business models with net-zero emissions targets. The decision to pause comes after banks said they would rely on their own frameworks rather than being part of a collective initiative.

The move comes at the heels of political pressure in the U.S., particularly from the Trump administration and Republican attorneys general, who have been pushing back against climate-focused investment strategies (ESG investing).

Read More: Barclays Quits Net Zero Banking Alliance

Major U.S. banks such as JPMorgan, Citi, and Morgan Stanley exited the alliance soon after Trump’s election win, citing the political climate. These banks argued that they had already integrated ESG principles into their businesses over the past five years.

The exodus did not stop in the U.S. European banks, including HSBC, Barclays, and UBS, also withdrew, which was a heavy setback because Europe is generally viewed as more supportive of climate action.

For example, UBS said that the NZBA had already helped it develop internal systems, and now it felt prepared to manage sustainability goals independently. These exits have raised concerns that the collective pressure and accountability that came from the alliance will weaken.

The suspension of the NZBA mirrors what happened with its sister group, the Net Zero Asset Managers initiative (NZAM), which also stopped operating earlier this year and lost members such as BlackRock, Vanguard, and State Street after facing lawsuits in Texas.

Texas Attorney General Ken Paxton accused the asset managers of antitrust violations, claiming that their membership in climate alliances harmed consumers by reducing investment in fossil fuels and increasing energy costs. A federal court recently allowed this lawsuit to move forward.

Also Read: Fossil Fuel Financing Surges as World’s Largest Banks Backtrack on Climate Goals

Meanwhile, investors and shareholders have expressed concerns about transparency. At Wells Fargo’s annual meeting, a representative from the New York City Comptroller’s office criticised the bank’s departure from NZBA, saying it made it harder for investors to track how the bank manages climate risks and energy transition opportunities.

In response, Wells Fargo’s CEO reaffirmed the bank’s own 2030 sustainable finance and operational goals, as well as its 2050 net-zero target, even without NZBA membership.

Ends/

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Source: WSJ