The “illusion” of voluntary climate action by the banking sector has been shattered. The Net Zero Banking Alliance (NZBA), described by critics as a performative measure, has disappeared, announcing its immediate shutdown after a mass exodus of its members.
According to Lucie Pinson of Reclaim Finance, the alliance’s purpose was to “create the illusion of measures in order to ward off the risk of regulation.” Its collapse, therefore, is not a failure of climate action, but a failure of a public relations strategy that had run its course.
The event that shattered the illusion was the re-election of Donald Trump. The resulting political pressure from the “anti-woke” movement forced banks to choose between maintaining the illusion and protecting themselves from political attack. They chose the latter, with the six largest US banks leading the charge for the exits.
This decision exposed the fragile, non-binding nature of the alliance. Without any real commitment required, members were free to leave when it became inconvenient. The departure of the US banks triggered a global unraveling, with European and Japanese members, including HSBC and Barclays, following suit.
With the illusion now shattered, the path forward is clearer for many activists. They argue that the focus must shift from encouraging voluntary pledges to demanding mandatory action. The failure of the NZBA, they contend, is the ultimate proof that the financial industry will only decarbonize when it is legally required to do so by government regulators.
