The Net Zero Banking Alliance (NZBA) was built on a fragile consensus that climate action was a pre-competitive issue for the banking industry. The complete unraveling of that consensus, driven by political polarization, is the primary reason the climate pact has fallen apart and shut down.
For a brief period, a consensus held that all banks faced a common threat from climate change and had a common interest in managing an orderly transition. This allowed the NZBA to grow rapidly, attracting a diverse group of nearly 150 members from around the world.
But this consensus was shattered by the re-election of Donald Trump and the rise of the “anti-woke” movement in the US. Climate action was aggressively reframed as a partisan political issue. This injected a divisive poison into the heart of the consensus.
The unraveling began when the six largest US banks decided that their political interests no longer aligned with the consensus. They broke away from the group, prioritizing their position within their domestic political context over their commitment to the international pact.
This first major tear caused the entire fabric of the consensus to unravel. With the Americans gone, the common ground disappeared. Other international banks, like HSBC and Barclays, no longer saw the value in a pact that was so clearly divided. The alliance fell apart, a victim of a political polarization that proved stronger than the consensus it was built on.
