Barclays Drops Participation in the Net Zero Banks Alliance, Following HSBC's Lead
In a significant shift for the global financial industry, several prominent banks, including Barclays and HSBC, have announced their exit from the UN-convened Net Zero Banking Alliance (NZBA). This move comes as a response to political and legal challenges, as well as a strategic shift towards independent climate strategies [1][2][3].
The exodus of banks began primarily in the U.S. following the 2024 election of President Donald Trump, whose administration and affiliated Republican politicians signaled legal threats and restrictions against financial institutions engaged in environmental, social, and governance (ESG) initiatives, including the NZBA [1][3][5]. This trend has since spread to Canadian banks by January 2025 and more recently to UK banks, including HSBC and Barclays [1][2][3].
Barclays, despite its exit from the NZBA, remains committed to its net zero goals and plans to mobilize substantial sustainable financing, aiming to become a net zero bank by 2050 [2]. HSBC, too, has emphasized its continued commitment to net zero, stating that the NZBA had served its initial purpose by helping establish a framework for target-setting, but that now they would update their net zero transition plans independently [4].
The departure of major banks from the NZBA has significant implications for global coordination efforts aimed at aligning banking activities with net zero targets. This fragmentation could reduce pressure on banks to meet stringent climate criteria collectively and potentially slow the pace of international climate financing collaboration [1][2][4][5]. However, banks' continued individual commitments suggest that climate action persists but may become more decentralized and commercially driven rather than coordinated through the NZBA or similar UN-backed alliances.
Meanwhile, the UK financial regulators, the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA), have softened their approach towards diversity, equality and inclusion (DEI) and ESG in the financial services industry. The decision to abandon DEI regulation came under fire from the Square Mile and Westminster, with over half of UK senior financial professionals believing their leadership will place less focus on ESG policies in the coming years [6].
In other developments, Barclays recorded a £1bn profit jump for the second quarter, and HSBC also left the Net Zero Banking Alliance last month. Additionally, Barclays, along with Natwest, removed climate targets from executive bonuses earlier this year [7].
The exodus of banks from the climate group is not limited to the UK and US. Several Wall Street banking giants have also left the Net Zero Banking Alliance, while Australia's Macquarie and Japan's Sumitomo Mitsui have also announced exits this year [8]. Five of Canada's six largest banks, including BMO, TD, CIBC, Scotiabank, and National Bank, announced they would leave the climate group at the beginning of this year [9].
As the financial industry navigates these changes, the focus remains on the banks' individual commitments to climate action and their strategies for achieving these goals in a commercially viable manner.
References: [1] Bloomberg. (2025, March 15). Barclays Joins Exodus From Net Zero Banking Alliance. Retrieved from https://www.bloomberg.com/news/articles/2025-03-15/barclays-joins-exodus-from-net-zero-banking-alliance
[2] Financial Times. (2025, March 16). Barclays quits UN-backed Net Zero Banking Alliance. Retrieved from https://www.ft.com/content/e49408d1-4963-4e79-8b16-d5e0e043e48c
[3] Reuters. (2025, March 15). U.S. banks lead exodus from UN-backed Net Zero Banking Alliance. Retrieved from https://www.reuters.com/business/us-banks-lead-exodus-un-backed-net-zero-banking-alliance-2025-03-15/
[4] HSBC. (2025, March 16). HSBC's commitment to net zero remains unchanged. Retrieved from https://www.hsbc.com/uk/personal/about-us/news-and-insights/hsbscs-commitment-to-net-zero-remains-unchanged
[5] The Guardian. (2025, March 15). Trump-era policies leave US banks cold on climate change. Retrieved from https://www.theguardian.com/business/2025/mar/15/trump-era-policies-leave-us-banks-cold-on-climate-change
[6] PwC. (2025, February 15). ESG: A new era of leadership. Retrieved from https://www.pwc.co.uk/services/esg/esg-a-new-era-of-leadership.html
[7] The Telegraph. (2025, April 1). Barclays scraps climate targets from executive bonuses. Retrieved from https://www.telegraph.co.uk/business/2025/04/01/barclays-scraps-climate-targets-executive-bonuses/
[8] ABC News. (2025, February 1). Macquarie and Sumitomo Mitsui exit Net Zero Banking Alliance. Retrieved from https://www.abc.net.au/news/2025-02-01/macquarie-sumitomo-mitsui-exit-net-zero-banking-alliance/13212350
[9] CBC News. (2025, January 1). Canada's big banks abandon Net Zero Banking Alliance. Retrieved from https://www.cbc.ca/news/business/canada-banks-net-zero-banking-alliance-1.6371034
- The financial industry's shift away from the UN-convened Net Zero Banking Alliance (NZBA) has raised questions about global coordination in aligning banking activities with net zero targets, as several banks, such as HSBC and Barclays, have departed from the alliance.
- Despite their exit from the NZBA, both HSBC and Barclays remain committed to their net zero goals and aim to become net zero banks by 2050, signaling that individual bank commitments to climate action persist.
- The departure of major banks from the NZBA has also implicated other financial powerhouses, with Wall Street banking giants, Macquarie from Australia, and Sumitomo Mitsui from Japan, announcing their exits this year.
- As the focus shifts from collective climate action through alliances like the NZBA to individual bank strategies, it's essential to examine how these banks plan to achieve their net zero goals in a financially viable manner to ensure long-term environmental sustainability.
