Net Zero Banking Alliance Responds to Backlash

(23 April 2025 – Global) Facing a loss of confidence amid challenging political and economic headwinds, the Net Zero Banking Alliance (NZBA) is responding to multiple headwinds as it adapts to its evolving climate leadership role.

Well publicised withdrawals by major US, Canadian, Japanese and Australian financial institutions (FIs) have dented the influence of the NZBA, prompting a softening of its 1.5 °C climate target to a broader alignment with the Paris Agreement. Key decision makers argue that rather than focusing on setting targets, the NZBA should pivot towards practical implementation and the complexity of transitioning different sectors at various speeds. Critics, disagree viewing the strategy reset as simply a dilution of climate goals.

More than 40 of the world’s largest banks joined the UN-convened alliance in 2021, pledging to align their lending and investment portfolios with net-zero emissions by 2050. With more than 140 members from 45 countries at the start of 2024, banks were keen to present themselves as leading the charge.

With rising energy prices and legal pressures, banks have lobbied for less stringent regulations rather than stronger climate policies. Proponents have argued that part of the NZBA’s future role should involve calling for regulatory intervention, rather than simply market action which would include proactive lobbying to support bold climate policy.

“The changes are part of a shift from target-setting to implementation. It’s about how banks can support their clients in the net-zero transition and unlock the opportunities that creates. That will happen at different speeds in different sectors and regions, which adds another layer of complexity. We need to look deep into each sector to unlock those opportunities” commented NZBA Steering Group Chair and First Abu Dhabi Bank Chief Sustainability Officer, Shargiil Bashir.

“The NZBA will help members with capacity-building, particularly in relation to climate regulations in different countries, and how to engage with different stakeholders, including policymakers.”