Ah, the heady days of 2021, when the world’s banks suddenly went all hippy and woke. Marching to the tune of their well-intentioned pied piper Mark Carney, 43 major global banks signed up to the Net-Zero Banking Alliance (NZBA) with the aim of ‘delivering the banking sector’s ambition to align its climate commitments with the Paris Agreement goals with collaboration, rigour, and transparency.’ They also sought the favour of the then-Prince of Wales in launching a Financial Services Taskforce (FSTF) as part of Prince Charles’ Sustainable Markets Initiative (SMI).
At the time HSBC CEO Noel Quinn said: “A commitment to financing the transition to net zero is essential. It’s important that the banking sector is committed to providing the financial support needed to help customers on that transition. But we have to establish a robust and transparent framework for monitoring progress against that objective and we want to set that standard for the banking industry. Industry-wide collaboration is essential in achieving that goal. I’m delighted that banks from the SMI Financial Services Taskforce have joined forces to establish the Net Zero Banking Alliance.”
Fast-forward just 4 years and the NZBA is no more. It has ceased to be! It has expired and gone to meet its maker! It’s a stiff! Bereft of life, it rests in peace! NordSIP has been gradually cataloguing the NZBA departures that accelerated once the Trump administration was put in place and the president-elect began cracking down on all things ESG. Among the high profile departures was the aforementioned HSBC, who despite their CEO’s apparent good intentions in 2021 had managed to steer $67.5 billion worth of financing towards new fossil fuel projects since signing up to the NZBA.
In what could arguably be a ‘no-sh*t Sherlock’ revelation, it seems that a purely voluntary initiative for private sector banks to forego easy profits from oil and gas financing did not work. With the interminable climate COP process and the global plastics treaty negotiations making little to no progress, one might question the United Nations Environment Programme’s (UNEP) ability to guide the fossil fuel and financial sectors onto a righteous pathway. The NZBA was set up under UNEP auspices and there is arguably a certain naivety in trusting these banks’ good intentions. JP Morgan Chase, the world’s biggest fossil fuel financier happily signed up to the NZBA and then proceeded to shovel almost $200 billion towards new oil and gas projects.
It seems that banks behave a bit like the playground kids that agree with whatever this year’s biggest bully is saying. Their handbrake u-turn from making all the right net-zero noises to falling in line with Trump’s essentially climate denying agenda is most impressive. Interestingly, while we have established that many of these banks are driven purely by short-term profits and have no interest in helping to address the climate crisis, some of them are starting to make a semblance of low-carbon transition.
While many banks are still supporting the fossil fuel sector, newly released Bloomberg figures show that financing provided to fossil fuel projects by Wall Street’s top six banks fell 25% through to end-July 2025 compared with the same period last year. Morgan Stanley’s oil and gas financing fell 54%, and even arch climate villains JP Morgan Chase’s dropped 7%. Have they had a sudden damascene conversion to climate enlightenment? The answer is more likely to be found in hard-nosed capitalist pragmatism. According to Bloomberg, banks that noisily and publicly left the NZBA to placate MAGA policymakers at federal and state level are beginning to quietly decarbonise as their lending books shift from the declining fossil fuel sector towards cleaner, profitable, and perhaps more future-proof technologies.
As well as providing loans directly to the fossil fuel industry, the banking sector is also responsible for ‘facilitated emissions’ related to their fee-based services to the capital markets. These include advising issuers on deal structure, pricing, and process, preparing supporting materials for security issuance, and engaging with potential investors in various ways. According to new information released on 17 September 2025 by Stockholm’s Anthropocene Fixed Income Institute (AFII), banks are also quietly increasing the proportion of fees they generate from syndicating loans and bonds to support climate and nature-focused investment by their clients. The AFII data reveal a general global shift with ‘green’ fees now exceeding ‘fossil’ fees. US banks remain worse than their European peers in this respect, with JP Morgan Chase still largely on the wrong track but the likes of Bank of America showing distinct signs of improvement.
The collapse of the NZBA put paid to the concept of large private sector banks voluntarily shifting away from the fossil fuel sector for altruistic reasons. Apart from some exceptions they seem to have been happy to make the right noises in 2021 while doing precisely nothing to decarbonise. When given the opportunity by Donald Trump to drop the green pretence they were only too eager to do so. Many NGOs have been calling for stronger regulation, legislation, and even litigation to force banks to address their financed and facilitated emissions. However, it seems that in the interim, basic economic forces might be helping to generate a ‘hush-hush’, gradual greening of the banking sector.
