The Net-Zero Banking Alliance ( NZBA ), once the cornerstone of global finance’s climate response, is at a crossroads. On August 27, its steering group announced that the NZBA is undergoing a critical vote among members to determine whether it should transition from a traditional member-based alliance into a broader guidance-based framework.

The result of this vote, due by the end of September, could define the future of net-zero banking as financial institutions globally wrestle with climate pressures, shifting policy landscapes, and intensifying scrutiny.

As the banking sector awaits the vote outcome, the broader question is, does the NZBA still have a future?

This strategic rethink comes amid a sweeping exodus of major global banks from the alliance. Institutions that have departed in recent months include J.P. Morgan, Citigroup, Bank of America, Morgan Stanley, Goldman Sachs, Wells Fargo, Macquarie, HSBC, Barclays, and UBS.

Many exits, particularly of US institutions, were allegedly triggered by political pressure that questioned the legality of alliance membership under antitrust laws.

In light of the widespread defections, HSBC and Barclays publicly stated that the NZBA was “no longer fit for purpose”, while Swiss bank UBS confirmed its withdrawal in August even as it emphasized ongoing commitment to sustainability through internal frameworks instead of alliance support.

Role transition

Asia has likewise felt the tremors. Japanese institutions have not been immune to the exodus. Sumitomo Mitsui Financial Group ( SMFG ), Nomura, and Mitsubishi UFJ Financial Group ( MUFG ) have all exited the NZBA earlier this year. 

Reported motivations include concerns over potential legal exposure in the US, specifically threats of antitrust scrutiny and fines.

Moving from a member-based alliance to a guidance-based framework would fundamentally reshape the NZBA’s role. As members of the alliance, banks are committed to binding targets, timelines, and disclosures, fostering accountability but exposing them to potential legal risks. 

A guidance model, by contrast, offers voluntary principles without enforcement. In effect, NZBA would shift from a climate accountability mechanism to merely an advisory platform.

With much of the alliance’s global footprint being diluted, the ongoing vote becomes a crucial test of whether NZBA can remain relevant. Is the shift to a guidance-only framework a resilient adaptation, or the first step towards irreversible decline?