A significant promise made by the global banking industry to help tackle climate change has been left unfulfilled. The Net Zero Banking Alliance (NZBA), the body that embodied this promise, has been officially disbanded after a crisis of commitment led to a mass exodus of its members.
The promise was ambitious: to align the lending and investment activities of its nearly 150 members with the goal of achieving net-zero emissions by 2050. It was presented as a landmark commitment from the heart of the global financial system.
However, the industry’s resolve to keep this promise was tested by a shift in the political climate. The re-election of Donald Trump in the US brought with it an “anti-woke” backlash that put intense pressure on the banks that had made the pledge.
When tested, the promise was broken. The six largest American banks, who were among the most powerful signatories, chose to renege on their commitment to the alliance. This initial breach was followed by others, as international banks like HSBC and Barclays also walked away.
The unfulfilled promise of the NZBA has left a legacy of mistrust. Climate advocates are now more skeptical than ever of voluntary corporate pledges. They argue that the episode proves that such promises are easily broken under pressure and that the only promises that can be relied upon are those that are codified and enforced by law.