Net-Zero Banking Alliance Ceases Amid Major Bank Departures, Weakening Global Climate Efforts

The Net-Zero Banking Alliance (NZBA), a UN-backed coalition launched in 2021 to align banks' financing activities with global net-zero emissions goals by 2050, has ceased operations due to significant political pressure and mass departures. Major U.S. banks including Goldman Sachs, J.P. Morgan, and Bank of America exited the alliance following the 2024 U.S. presidential election victory of Donald Trump and ensuing Republican opposition to climate initiatives. Canadian banks also withdrew in early 2025, alongside some European banks later in the year, weakening the alliance's influence and prompting a vote to end its membership-based structure. Despite attempts to soften climate targets by raising the warming limit from 1.5 to 2 degrees Celsius, defections continued, leading to the decision to close the NZBA immediately and transition its climate guidance into a non-binding framework. The closure has drawn mixed reactions, with some critics lamenting the loss of a platform for accountability, while others argue the alliance was ineffective and that stronger regulatory intervention is necessary to drive climate action in finance. Ultimately, the NZBA's shutdown highlights the challenges of sustaining voluntary climate commitments amid shifting political landscapes and underscores the need for policy-driven solutions to address climate risks in the banking sector.