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HSBC faces backlash after Net-Zero Banking Alliance exit, while Singapore and the UK expand their green finance ties and India reportedly gears up to release finalised disclosure rules.
HSBC faces client rebellion after retreat from climate coalition
HSBC’s decision to leave a major climate coalition has triggered a backlash among the bank’s more climate-focused clients, Bloomberg reports.
HSBC was a founding member of the Net-Zero Banking Alliance (NZBA) but earlier this month became the only major UK bank to withdraw from the group, putting the spotlight squarely on its climate credibility.
British green energy firm Ecotricity announced it had dropped HSBC, moving its £600mn turnover elsewhere in protest. “People care where their pension money goes and who they bank with,” founder Dale Vince said.
The decision comes against the backdrop of other Wall Street exits from climate alliances, raising questions about the trajectory of voluntary climate commitments across the banking sector. US banks which have left the NZBA – JP Morgan Chase, Bank of America, Citigroup and Mizuho Financial – were the top four financiers of fossil fuels over the last year, according to Banking on Climate Chaos’ annual climate stocktake of the sector.
India edges closer to finalised climate disclosure rules for banks
India’s central bank is preparing to introduce long-awaited climate risk disclosure rules in the coming months, representing a major step to align with global standards and support the country’s 2070 net-zero goal.
Reuters reports that the new guidelines set by the Reserve Bank of India (RBI) will require banks to regularly disclose their exposure to climate-related financial risks across their loan portfolios, outline their mitigation strategies and targets, and conduct stress tests against extreme weather events. A technical guidance note on climate scenario analysis to aid with stress testing is expected soon.
The framework builds on an earlier consultation draft which included scope 3 emissions reporting as well as sectoral risk breakdowns. Initially, disclosures will be voluntary starting in the 2027 financial year, becoming mandatory from 2028 following a phased implementation.
India’s largest commercial banks have reportedly already started hiring climate consultants to meet anticipated requirements.
ECB: European heatwaves drive up food prices while slashing output
European summer heatwaves “substantially reduce” regional economic activity and ramp up food prices, threatening inflation stability and growth, says European Central Bank (ECB) senior lead economist Miles Parker.
A recent ECB working paper found that in the year following a heatwave economic output falls by around 1%. Notably, the reduction in output is prolonged and even intensifies reaching 1.5% after two years, which Parker says challenges the traditional view that extreme weather events cause temporary disruption followed by a period of recovery.
Researchers found that, four years after an event, regional output is actually 3% lower following a drought and 2.8% after a flood.
The most recent heatwave, which saw record-breaking temperatures and even nuclear plants forced to curb output, underscores the growing burden for policymakers. As Parker, points out: “heatwaves are likely to have a much more pronounced impact on the economy are prices in the future”.
Singapore and UK strengthen green finance ties
Singapore and the UK have announced a landmark green finance partnership, with the UK pledging up to £70mn to Singapore’s FAST-P program to channel blended finance into sustainable infrastructure projects across south-east Asia. The funds will be provided by the UK’s development finance institution, British International Investment.
The agreement aims to deepen cooperation on sustainable finance and the energy transition between the two nations, scaling up regulatory ambition and translating it into practical project delivery. It is underpinned by commitments to develop joint standards on transition finance, climate risk disclosures and measures to tackle greenwashing.
The partnership “marks a major step forward in the UK-Singapore strategic partnership and reflects both countries’ commitment to support Asia’s green energy transition”, said the Monetary Authority of Singapore in a statement.
Research highlights
The Rise of Climate Risks: Evidence from Expected Default Frequencies for Firms
This new paper from Banca d’Italia finds a “positive and statistically significant” link between firms’ carbon emissions and credit risk since the Paris Agreement. By analysing Moody’s expected default frequencies, the study shows that transition risk now predicts higher default probabilities for high-emitting companies, mainly due to increased asset volatility. The findings underscore how climate-related financial risks are increasingly integral to credit markets, with results holding across regions and sectors.
Incorporating Physical Climate Risks into Banks’ Credit Risk Models
The BIS study explores practical approaches for embedding physical climate risks such as floods and heatwaves into bank credit risk models. It highlights the challenges banks face in modelling risks from extreme weather and proposes a “relatively simple” framework to improve loss projections and stress testing. The paper emphasises the importance of granular physical risk data and suggests that better integration of these risks can help stabilise the financial sector as climate hazards intensify.
Scenarios for CSRD Scope Amendments – Advancing Reporting Scope While Reducing Further Burden
This research paper examines potential revisions to the EU’s corporate sustainability reporting directive (CSRD), with a focus on expanding reporting requirements while minimising compliance burdens. The paper outlines several amendment scenarios, analysing their implications for companies and regulators, and proposes a two-tiered reporting system based on company size. This approach would expand the CSRD’s scope by 6,800 companies while reducing compliance burdens, potentially saving up to €437mn annually and enhancing proportionality and efficiency in sustainability disclosures.
This page was last updated July 23, 2025
Written by
Ike Walker, a Green Central Banking contributor since 2023, has a decade's experience in research writing. An Utrecht-based scholar, Ingrid specialises in transformative justice, green finance, law and systems change. They are an Utrecht University's Bright Minds scholar and previously worked for Cambridge University and various justice-based NGOs.
