The Net Zero Banking Alliance (NZBA) has shut down, prompting a critical question: was it built to fail? The global group has ceased operations after a wave of departures, leading critics to argue that its voluntary, non-binding nature made its collapse almost inevitable in the face of real-world pressures.
According to Lucie Pinson of Reclaim Finance, the alliance was “doomed to fail” because its purpose was not to drive real action but to “create the illusion of measures” to fend off regulation. This perspective suggests the NZBA’s structure was its fatal flaw, lacking the teeth to enforce compliance or withstand political headwinds.
The primary headwind was the re-election of Donald Trump. His administration’s “drill, baby, drill” agenda fueled an “anti-woke” movement that targeted corporate climate initiatives. This put US banks in a vulnerable position, leading to a mass exodus of the six largest firms, including giants like Wells Fargo and Goldman Sachs.
This exodus proved the critics’ point about the alliance’s fragility. Without any mechanism to compel membership or penalize departures, the NZBA was powerless to stop its most important members from leaving. The subsequent withdrawal of European and Japanese banks, including HSBC and Barclays, was merely the logical conclusion of this structural weakness.
While some advocates are disappointed by the outcome, arguing for more corporate courage, the shutdown has strengthened the case for regulatory intervention. The failure of the NZBA is now being held up as Exhibit A in the argument that voluntary frameworks are insufficient. Activists insist that only legally binding rules from policymakers can force the financial sector to align with global climate goals.