The demise of the UN-backed Net Zero Banking Alliance (NZBA) has highlighted how difficult it is to create single standards for the global financial sector, the Bankers Association for Finance and Trade (Baft) has said.
The NZBA officially shut down earlier this month after members voted to end the alliance and instead use its guidance as a framework for setting net-zero targets.
The decision, which comes after a rocky year for the organisation in which several major banks exited, illustrates the challenges of aligning multiple banks across the globe, says Baft.
“What the disbanding of NZBA shows is the difficulty of establishing single standards that are flexible enough to accommodate the many bank operating models and regional variances on sustainability goals,” says Andy Price, vice-president, international policy, and sustainability and ESG lead at Baft.
“It is particularly difficult when it comes to transaction banking and trade, which is global by nature and addresses sustainability goals beyond just environmental.”
The NZBA was one of several groups gathered under the overarching Glasgow Financial Alliance for Net Zero (GFANZ), which was set up to commit financial institutions to achieving net-zero financed emissions by 2050.
At its peak, it had almost 150 members, but it suffered a wave of defections in the last year.
Six large US banks withdrew from the initiative in December and January, with climate campaign groups suggesting it was linked to the election of Donald Trump. Weeks later, five leading Canadian banks followed suit.
Citi, which left in December 2024, said it was exiting to focus on “addressing barriers to mobilising capital to emerging markets”, a goal that was announced as part of GFANZ’s updated focus at the start of 2025.
HSBC left in July, followed by Barclays, with the latter claiming the NZBA “no longer has the membership to support our transition” after most global banks had departed.
Both HSBC and Barclays said they remained committed to their ambition to be a net-zero bank by 2050.
In April, NZBA members voted to weaken key climate commitments, including removing mandatory targets and a requirement to support the transition towards a net-zero economy.
At the time, Dutch-headquartered Triodos Bank left the group after stating that the new guidelines “[fell] short of the needed urgency to align loans and investments portfolios with the 1.5°C global warming scenario”.
Triodos said the shift to more lenient requirements “significantly undermines” the NZBA’s effectiveness.
Baft’s Price says many banks remain committed to their climate goals and to providing sustainable financing, with a global standard still possible.
“Baft is working on approaches that are not exclusively climate-centric but accommodate social and economic goals, while allowing for differing priorities and challenges around the world,” Price says.
“We believe these will more closely align the end results with the UN Sustainable Development Goals, without being overly prescriptive in nature. We may eventually reach a global standard, but the transition will require flexibility in approach.”
Most of the other groups within GFANZ are still operational, including the Net Zero Export Credit Agencies Alliance, Net Zero Asset Owner Alliance, Paris Aligned Asset Owners, Net Zero Financial Service Providers Alliance, and Net Zero Investment Consultants Initiative.
The Net Zero Insurance Alliance, like the NZBA, folded in April 2024 after several members left.
After BlackRock departed from the Net Zero Asset Managers initiative in January 2025, the alliance announced it was suspending activities while it carried out a review to ensure it remained “fit for purpose in the new global context”.
GTR understands that an updated commitment statement is expected before the end of the year.
Other groups, like the UK-based Bankers for Net Zero (B4NZ), a supporting institution of NZBA, are working through what the consequences are for sustainable finance following the NZBA’s transition. “Our focus remains on mobilising capital towards the projects, organisations and communities driving real-world decarbonisation,” a spokesperson tells GTR.
“We’ll continue to work with government, regulators, and industry to develop the practical frameworks and partnerships that turn net zero commitments into measurable progress.”
