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Inside the world’s largest climate coalition for banks, there’s speculation that an exodus led by Wall Street could be about to spread to the European Union.

The Net-Zero Banking Alliance, an organization dedicated to decarbonizing global finance, may be facing defections by some large EU banks with sizeable US exposures, according to a person close to the matter who asked not to be identified discussing private deliberations. The risk of being accused in the US of having an anti-oil bias appears a key concern among the banks, the person said.

EU exits from NZBA would mark a painful milestone for the group. In the US, where President Donald Trump’s reelection has brought with it intensified political attacks on net zero policies, banks have had to navigate a landscape in which NZBA commitments have come with the risk of lawsuits and GOP blacklists. In the EU, meanwhile, net zero has been enshrined in law and the bloc’s banks stand out as some of the world’s most climate conscious.

A spokesperson for NZBA said the alliance is committed to supporting its remaining members, without commenting on possible EU defections. This moment calls for “long-term work that requires courage, consistency and true leadership to stay on track, even when faced with barriers to action,” the person said.

BNP Paribas SA, the EU’s biggest bank by assets, was questioning the value of continued NZBA membership as recently as June, according to another person familiar with the matter who asked not to be identified discussing private conversations. The bank is reluctant to create headlines by leaving, however, and back in June discussed postponing a formal decision until around the end of the year, the person said. A spokesperson for BNP declined to comment.

Deutsche Bank AG, Germany’s largest lender, is “monitoring current developments and will assess them,” according to a spokesperson, who added that the bank’s own sustainability and net zero targets remain unchanged.

A spokesperson for Spain’s Banco Santander SA said it’s still committed to net zero but declined to say whether that includes remaining an NZBA member.

A UniCredit SpA spokesperson reiterated comments it made last month in connection with its earnings release, when the bank noted that it’s an NZBA member with a net zero transition plan to support clients in their low-carbon transition.

Commerzbank AG closely monitors “market trends, regulatory developments and jurisdictions to ensure we can act appropriately if necessary,” Beate Schlosser, a spokeswoman for the bank said by email. Commerzbank’s 2050 net zero goal still holds, she said.

Among reasons EU bank executives have given in the past for staying in NZBA was the access it gave them to other banks. But as defections continue, that access is no longer a selling point. Barclays Plc, which left earlier this month not long after UK peer HSBC Holdings Plc, said the string of walkouts means NZBA “no longer has the membership to support our transition.”

Barclays’ exit was promptly followed by UBS Group AG of Switzerland. Those departures, though all by banks in non-EU countries, have added to speculation that EU banks will be next, the person familiar with discussion inside NZBA said.

The value of climate alliances such as NZBA remains a topic of debate. Lisa Sachs, head of Columbia University’s Center on Sustainable Investment, said that a key weakness of frameworks like NZBA is the assumption that the finance industry can have a material impact on the low-carbon transition simply through setting targets to reduce emissions and committing to nudging portfolio companies to decarbonize.

“Financial institutions are not the right institutions to fix market flaws or deliver societal transitions because their mandates are to maximize returns within existing market conditions,” she said. “And their assessments of risk are based on those parameters rather than on long-term societal risks.”

NZBA still has 125 members across the globe representing a combined $41 trillion in assets, according to its website. Banks in Northern Europe are among the most outspoken in their support, with ING Groep NV and ABN Amro Bank NV in the Netherlands, Swedbank AB and SEB AB in Sweden and Danske Bank A/S in Denmark all underscoring their backing via spokespeople.

The alliance was created to encourage banks to throw their weight behind the net zero transition. It initially required members to align their financing operations with the goal of limiting global warming to 1.5C. But after being virtually wiped off the North American map earlier this year, NZBA dropped that requirement and recast itself in more of a support role.

It’s a dramatic loss of stature for the alliance, which was created back in 2021 and feted by global bank executives at the COP26 climate summit in Scotland. Back then, when interest rates were at crisis lows and a global pandemic had created room for a green energy boom, net zero finance looked like a reliable path to commercial success. That narrative was reinforced when US President Joe Biden a year later signed the Inflation Reduction Act — the biggest piece of green legislation in US history.

Ironically, NZBA is hemorrhaging members just as fossil-fuel finance appears to be in decline on Wall Street. Policies designed to push up supply and drive down prices have pummeled the oil sector, and analysts at JPMorgan Chase & Co. have said this moment may mark the first decline in global upstream oil and gas development spending since 2020.

In all, financing provided to oil, gas and coal projects by Wall Street’s top six banks fell 25% to $73 billion this year through Aug. 1 from the same period in 2024, according to data compiled by Bloomberg.

“A fundamental truth is that financial institutions follow markets — they don’t create them,” Sachs of Columbia University said.

Banks that have left NZBA in the UK have faced some pushback from clients and investors. HSBC a string of green customers, and the Church of England Pensions Board says it’s now “engaging” with Barclays and HSBC on their NZBA exits.

“As a shareholder we want to see banks to be genuinely committed to acting to address very real quantifiable financial risks like climate change,” says Laura Hillis, director of responsible investment at the pensions board. “It is very clear that some banks simply are not prepared to stay the course on their own commitments long term, which points to governance issues.”

At the same time, banks leaving NZBA have said they’ll continue to help clients decarbonize their businesses. UBS said on Aug. 7 its “commitment to sustainability remains unchanged and we recognize the importance of an orderly transition to a low-carbon economy.” Departing banks are also sticking with their sustainable finance goals. HSBC, for example, says it did $54.1 billion in deals it categorized as sustainable finance in the first half of 2025, which is up 19% from the same period a year ago.

The bottom line remains that the decisions made by financial institutions “are driven by whether a specific investment is financeable today, given current market conditions, policies, and risk-return profiles,” Columbia’s Sachs said.

Top photograph: Pedestrians use a road crossing outside a Danske Bank A/S bank branch in central Copenhagen, Denmark, on Wednesday, Sept. 19, 2018. Photo credit: Freya Ingrid Morales/Bloomberg

Topics Europe