Barclays has announced its withdrawal from the Net-Zero Banking Alliance (NZBA), following a similar move by HSBC earlier this year, signalling a broader retreat by major banks from coordinated climate commitments under the United Nations-backed initiative. The decision aligns the UK-based lender with several large US banks that have already exited the NZBA, citing concerns over legal risks, shareholder pressure, and restrictions on financing activity.
UN climate finance initiative losing momentum
The NZBA, launched in 2021 under the UN Environment Programme, aimed to align the global banking sector with net-zero greenhouse gas emissions by 2050. Members committed to science-based targets, regular reporting, and limits on lending to high-emissions industries unless decarbonisation plans were in place. With Barclays and HSBC now stepping back, the alliance has lost two of its largest European members, raising questions about its long-term credibility and cohesion.
Barclays cites flexibility and fiduciary duties
In a statement, Barclays said its decision was driven by a need to “retain flexibility” in supporting clients across the energy transition. The bank reaffirmed its commitment to climate goals but emphasised that participation in multilateral initiatives should not “conflict with our fiduciary responsibilities or limit our ability to serve diverse sectors.” The wording mirrors similar explanations from JPMorgan Chase, Bank of America, and Wells Fargo, all of which withdrew from the NZBA in late 2024.
Climate advocates express concern over corporate backtracking
Environmental groups have criticised the wave of exits, warning that it reflects a broader pullback from climate ambition in the financial sector. “Barclays and others are sending a dangerous signal that voluntary alliances can be abandoned when inconvenient,” said a spokesperson for ShareAction. Critics argue that fossil fuel lending remains high and that voluntary targets without enforcement mechanisms are proving insufficient in the face of growing climate risks.
Regulatory and political pressures are mounting
Analysts point to mounting political resistance to ESG mandates, particularly in the United States, where Republican lawmakers have accused financial institutions of overreaching. Legal uncertainty surrounding antitrust laws has also played a role in the dismantling of coordinated action among banks. European regulators, however, continue to push for greater transparency and climate risk disclosures, suggesting a growing transatlantic divergence in regulatory approaches.
Uncertain future for climate finance governance
With high-profile banks now departing, the NZBA faces an inflexion point. Some members are calling for a revision of its framework to accommodate broader business realities, while others insist that strong collective standards are essential to limit warming. The exits by Barclays and HSBC may embolden further defections, unless new incentives or policy structures emerge to reinforce sector-wide cooperation.
REFH – Newshub, 2 August 2025
Recent Comments