The Net Zero Banking Alliance (NZBA) has become a cautionary tale about the limits of voluntary corporate climate action. The UN-backed group has officially shut down, a development that critics who labeled it “doomed to fail” from the start say was entirely predictable.
The alliance’s fatal flaw, according to these critics, was its lack of an enforcement mechanism, making it susceptible to external pressures. That pressure materialized in the form of the re-election of Donald Trump and the subsequent “anti-woke” political movement in the United States, which targeted corporate ESG initiatives.
Faced with this political threat, the NZBA’s most powerful members—the six largest US banks—chose to leave rather than fight. This mass exit, featuring firms like JPMorgan Chase and Morgan Stanley, demonstrated the alliance’s powerlessness and triggered its inevitable collapse.
The international fallout was swift. With the US contingent gone, the alliance lost its global standing, prompting a wave of departures from banks in Europe and Japan. The recent exits of HSBC and Barclays were the final confirmation that the voluntary model had failed its first major stress test.
The cautionary tale of the NZBA is now being used to bolster the argument for government intervention. Activists contend that the episode proves that corporations cannot be relied upon to regulate themselves, especially when it conflicts with political or short-term financial interests. They argue the only path forward is through legally binding rules that mandate a shift away from fossil fuel financing.