The rise and fall of the NZBA
Carney-championed and global in reach, the Net-Zero Banking Alliance (NZBA) was formed in April 2021 as part of a broader push to align lending with climate goals. Then-United Nations special envoy on climate action and finance, Mark Carney, helped bring together 63 financial institutions from 32 countries, representing roughly US$40 trillion in assets. The alliance’s Canadian footprint began with Vancouver City Savings Credit Union as the sole Canadian member at COP26, and soon grew when the country’s biggest banks joined the effort—RBC, Toronto-Dominion Bank, Bank of Nova Scotia, Bank of Montreal, Canadian Imperial Bank of Commerce and National Bank of Canada announced their participation in October 2021.
Over its relatively short life, the NZBA published more than a dozen reports that, according to its website, helped almost 150 banks worldwide sharpen climate-related business strategies and set more than 500 sectoral net-zero targets. The initiative functioned as a mechanism to foster oversight, guidelines, and reporting on how banks would pursue climate-aligned lending and disclosures in a rapidly changing regulatory and political environment.
Canada’s role and the exodus
In the long arc of the alliance, Canada’s major lenders stayed for a time, but the article notes that all of Canada’s largest lenders bailed earlier this year. The withdrawal coincided with a broader backlash to climate-related corporate initiatives that intensified after the 2024 U.S. election cycle, reshaping how cross-border financial groups approached climate commitments.
Influence in doubt
With one of the world’s most influential financial centers stepping back from an international coalition, observers questioned what would replace the NZBA as a global governance mechanism for climate finance in banking. The alliance’s decline also intersected with the parallel retreat of the NZAMI, its institutional investor counterpart, which paused operations in January after BlackRock reportedly exited the consortium. The withdrawal of these heavyweight members highlighted the fragility of voluntary, industry-led frameworks amid shifting political winds.
The leadership’s view and the shifting landscape
Even as banks debated the future of such alliances, the leadership offered nuanced assessments. At a January conference, Royal Bank of Canada (RBC) Chief Executive Officer Dave McKay suggested that while commitments to net-zero hadn’t wavered, the NZBA as a governance mechanism might not be the right vehicle to drive climate action any longer. He stated, “If our countries have an objective to get to a certain point, we will be part of that, and therefore pulling out of NZBA hypothetically doesn’t lead to non-commitment to net-zero climate change. It just means that mechanism, that organization that fostered oversight and policies and rules around what you can and can’t do and how you report, maybe that is not the right mechanism to do it.”
Similarly, BMO Chief Executive Darryl White underscored that the bank remained committed to climate transition but emphasized Canada’s responsibilities to traditional energy portfolios. “We also have a commitment, particularly here in Canada, to our legacy energy customers, and we will not abandon that,” White noted, adding that the specific mechanism or body banks align with to enforce these aims is a matter of pathway rather than principle.
What comes next for climate finance in banking
The dissolution of the NZBA raises questions about how banks will coordinate climate-related lending in the future. Some lenders may move toward internal, bank-by-bank strategies, while others may seek alternative multilateral or regionally focused partnerships that offer more flexible governance. Regulators and policymakers—particularly in North America—could increasingly favor national policies, mandatory disclosures, and sector-specific standards over voluntary coalitions if private-sector strategies falter in the current political climate.
Key takeaways
The NZBA’s collapse illustrates how political headwinds can reshape climate finance infrastructure, even as banks continue to pursue net-zero objectives. The event underscores the need for robust, durable policy frameworks—whether through government action or adaptable industry mechanisms—that can withstand shifts in political sentiment while maintaining momentum toward a low-carbon economy.
