NZBA Departure Disaster: Banks’ Alliance Exit Triggers Operations Suspension
August 29, 2025
The Net-Zero Banking Alliance (NZBA) has suspended operations following several further high-profile departures of banks from the initiative in recent weeks.
The NZBA this week opted to pause its ongoing activities. The alliance has initiated a vote among members to decide on a proposed transition from a membership-based alliance to establishing its guidance as a new framework initiative. The outcome of this vote will be shared at the end of next month.
The NZBA Steering Group stated that transitioning into a framework initiative is 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, as well as to continue engagement with the global banking industry to develop further guidance and tools needed to support them and their clients”.
The NZBA has also urged the banking sector to “remain steadfast in implementing their net zero commitments”.
Convened by the United Nations Environmental Programme Finance Initiative (UNEP FI), the NZBA’s primary objective is to provide guidance and support to banks in reducing portfolio emissions to net zero by 2050. More than 120 banks from 40 different countries have joined the alliance since its 2021 inception.
Earlier this month, UBS left the NZBA citing its strengthened in-house capabilities to achieve sustainability- and climate-related objectives since becoming involved with the alliance in 2021. Barclays exited the alliance at the start of this month, while HSBC departed in July.
Pressure on banks from the right-wing, particularly in the US, began to mount in the second half of last year and has only intensified since the re-election of Donald Trump in November.
Goldman Sachs was the first high-profile bank to publicly exit NZBA, triggering several further departures ahead of Trump’s January inauguration. Wells Fargo, Bank of America and Citigroup left the alliance before the end of 2024, while Morgan Stanley and JP Morgan jumped ship in the first week of January.
The US banks were joined by Canada’s six largest banks – Bank of Montreal, the Canadian Imperial Bank of Commerce, National Bank of Canada, TD Bank, Royal Bank of Canada and Scotiabank – also announced their exits from NZBA by the end of January.
The exit of Canadian, European, UK and US banks from NZBA suggests that the impact of Trump and Republicans’ campaign against ESG and related topics is spilling over borders and is being felt on a global scale.
The NZBA appeared to ease its requirement in order to staunch the flow of departures, removing a requirement for members to strictly target limiting global temperature rise to 1.5°C as part of an update in April. This also appeared to backfire, however, with Dutch bank Triados quitting the alliance due to the stripping back of its standards.
In May, more than 40 Congressional Democrats sent letters to the CEOs of 12 major US banks and investment managers that have exited industry climate alliances including the NZBA, as reported by Minerva Analytics. However, this campaign appears to have had little impact.
After the Bank of America, JP Morgan, Morgan Stanley and Wells Fargo exited the NZBA, Texas Attorney General Ken Paxton ended probes he had previously launched into the banks. This year, Texas and Paxton have prominently targeted asset managers and proxy advisors in addition to banks over their ESG and climate commitments.
The NZBA’s sister organisation the Net Zero Asset Managers initiative (NZAM), which was also established by UNEP FI, suspended activities in January following the widely publicised exit of BlackRock. As reported by Minerva Analytics, at the time NZAM had said it would review the initiative to ensure that it was still fit for purpose in the “new global context”. No news on the NZAMs website has been published since the news was announced at the start of this year.
Texas’ Paxton led a lawsuit against the ‘big three’ asset managers BlackRock, State Street and Vanguard at the end of last year which involves 13 Republican states. The lawsuit alleges that by engaging in climate activism by joining investor initiatives like Climate Action 100+ and using shareholder advocacy to impact coal production and energy prices the asset managers had fallen foul of the country’s antitrust rules.
As reported by Minerva Analytics, earlier this month a Trump-appointed judge declined to dismiss the vast majority of the counts in the case against the asset managers, meaning that the 13 states can move forward with their claims that they had violated US antitrust law.
Last month, finance officers of 21 Republican-run US states also sent a letter to several major asset managers demanding that they scale back their ESG-related investment activities to continue to do business within the states, as reported by Minerva Analytics.
Democrats have fought back, however, with financial officers from 16 Blue states sending a letter to many of the same asset managers earlier this month, calling on them to publicly reassert their commitment to responsible stewardship practices.
Both letters have set a September 1 deadline for the asset managers to respond to their demands.
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Last Updated: 29 August 2025