Following the departure of banks from the US and other countries, the NZBA has paused operations to canvas its remaining members. Photo: Carlos Delgado
The Net Zero Banking Alliance (NZBA) has suspended its operations and is asking members to vote on a restructuring after an exodus of banks has left the volunteer commitment group a shell of its former self.
North American banks left the alliance soon after the election of US president Donald Trump, with banks in Japan, Australia and Europe following in recent months. The NZBA is asking its remaining members to decide if it should become an advisory group instead of a membership-based organisation.
This would be “the most appropriate model to continue supporting banks across the globe to remain resilient and accelerate the real economy transition in line with the Paris Agreement”, the NZBA stated.
But whether an advisory body would be effective would depend on how active they are, said Katrin Ganswindt, head of financial research at Urgewald.
“Will they be an entity that mostly keeps silent or do they plan to proactively bring different bodies together? Can they throw around their weight as banking industry insiders and capitalise on their experience of what works and what doesn’t work?”
Political pressure
The NZBA was founded four years ago, with members committing to align their lending and investment portfolios with achieving net zero by 2050. Members initially included the world’s largest banks.
The NZBA exodus began soon after Trump won the US election last November, as the administration pulled out of the Paris Agreement and has advocated for an increase in coal and gas investments.
EU banks were also rumoured to question whether it was worth staying in the NZBA given its membership loss and the scraping of requirements to target a 1.5°C limit.
Ganswindt said the decision to suspend operations was disappointing, with the NZBA losing an opportunity to make even stronger climate commitments.
“I thought, especially when the big North American banks moved out, that maybe this is a chance for those left to go farther with [their] investment commitments. And then I was all the more disappointed to see the 1.5°C limit get voted down last spring.”
The latest move to try to become an advisory group is not surprising, said Burno De Conti, senior researcher at Positive Money.
“Private finance, if left to its own devices, will not deliver the major shift in financial flows which is required to address the ecological crisis.”
Financial institutions were on board with climate considerations when the political environment was more favourable and they could benefit commercially, he added.
“It was already predictable that as soon as the wider political environment turned more strongly against climate action, especially in the US right after Trump’s election, the banks, the asset managers, the insurers, they did not hesitate to drop to their earlier climate pledges, both for fear of losing out commercially but also in the US context, particularly because they have fear of the threat of legal action,” he said.
While Republicans in the US are suing asset managers that consider ESG factors in pension funds, a climate opinion from the International Court of Justice could also increase climate litigation against banks.
Ineffectiveness of voluntary climate groups
Even before an exodus of banks, research from the European Central Bank and others has found that voluntary commitment groups like the NZBA are not effective in reducing financed emissions.
As some large banks left the NZBA, they have publicly announced their commitment to curb emissions. Others have been less vocal while still lessening their financing of fossil fuels, a term dubbed “greenhushing”.
“If they had any kind of climate language before, obviously they would still say they are committed to net zero. But I can imagine that some greenhushing is [happening]” said Ganswindt.
But despite their commitments, banks and financial institutions have continued to invest in fossil fuels. Globally, financial institutions have provided US$385bn in loans and underwriting to the coal industry since 2021, while the world’s largest banks pledged US$869bn to fossil fuel firms in 2024.
This has led some experts to advocate for mandatory measures to ensure that countries meet their climate goals.
“If the global economy is to be decarbonised at a sufficient pace, [regulators] shouldn’t help lock in an even more catastrophic climate breakdown,” said De Conti. “Governments and central banks around the world will need to be prepared to take a much more interventionist approach to divert finance away from fossil fuels”.
The outcome of the NZBA vote will be announced at the end of September.
This page was last updated September 9, 2025
Written by
Moriah Costa is the Editor-in-Chief of Green Central Banking and has over a decade of experience writing about banking and finance. She is an award-winning American journalist based in Paris and has written for major international publications, including Reuters, The Guardian, and S&P Global. Having grown up in water-stressed Arizona, she has always had a strong interest in bringing awareness to climate and environmental issues.
