The Net-Zero Banking Alliance, NZBA, an international green banking alliance is now suspending its activities and holding a critical vote to determine its future.
This decision follows the departure of several major banks, including a number of prominent North American and European institutions. The alliance is considering a transition from a membership-based group to a new framework initiative.
The alliance’s status:
The NZBA, founded in 2021 as part of the Glasgow Financial Alliance for Net Zero (GFANZ), was created to help financial institutions make green investments in support of a net-zero society.
It grew to over 120 member banks, but recently has seen a significant number of banks exit. These departing banks, including all of Canada’s five largest and many major banks from the U.S. and Europe, have stated they feel they are now “well-positioned to further this work outside of the formal structure of the NZBA.” Some analysts point to growing political pressure in certain regions as a contributing factor to these departures.
The proposed change:
In response to the member departures, the NZBA is holding a vote on a proposed transition to a new model. Instead of a membership-based alliance, it would become a “new framework initiative.”
The organization believes this would be the “most appropriate model” to continue supporting global banks in their transition toward a low-carbon economy. This change would shift the NZBA’s role from a governing body with a committed membership to a more advisory role, providing guidance and tools to the industry. The specifics of the new framework are still being developed, and the results of the vote are not expected to be made public until the end of September.
The impact:
The pause in NZBA’s activities and the departure of major members raise questions about the future of voluntary climate initiatives in the financial sector.
Some experts argue that this highlights the limits of voluntary commitments and signals a need for more robust regulatory measures to drive change. They believe that without a unified, coordinated approach, banks may follow divergent climate strategies, making it difficult to hold them accountable.
Conversely, some banks that have left the alliance have stated that they remain committed to their own net-zero goals and will continue their climate-focused work independently. The situation reflects the broader challenges facing voluntary environmental, social, and governance (ESG) efforts in a changing political and economic landscape.
