The collapse of the Net Zero Banking Alliance (NZBA) has unequivocally put the onus for climate action in the financial sector squarely on the shoulders of policymakers and regulators. The failure of this major voluntary initiative is being framed by critics as the final piece of evidence that industry self-regulation does not work.
This sentiment was captured by Lucie Pinson of Reclaim Finance, who stated that meaningful change “cannot happen without intervention from policymakers and regulators. Their action is essential.” The NZBA’s demise has transformed her assertion from a campaign slogan into a widely accepted conclusion.
The alliance’s failure was a textbook case of the limitations of voluntary action. When faced with a significant external pressure—the “anti-woke” movement in the US following Donald Trump’s re-election—the voluntary commitments proved worthless. The six largest US banks, followed by international peers like HSBC and Barclays, simply opted out.
This has created a policy vacuum. The primary mechanism through which the industry claimed to be addressing climate change has now vanished. This leaves a clear field for governments to step in and fill the void with binding rules.
The pressure is now on these regulators to act. The argument that they should wait and see if the industry can solve the problem on its own has been effectively nullified. The NZBA’s collapse has created a mandate for action, and campaigners will now focus their entire efforts on ensuring that this “essential” regulatory action is swift, comprehensive, and effective.