Executive summary

The year 2025 represents a critical juncture for private finance as the global climate finance landscape undergoes significant shifts. The Glasgow Financial Alliance for Net Zero (GFANZ) and its banking arm, the Net-Zero Banking Alliance (NZBA), ceased operations on 3 October 2025. This followed months of membership withdrawals and the softening of guidelines. Major US banks, including JPMorgan Chase, Citigroup, and Goldman Sachs, led the wave of exits, reducing the alliance’s coverage of the US banking sector from 44.6% to just 0.045% of assets. European banks such as HSBC, Barclays, and UBS followed. While many institutions have maintained individual sectoral decarbonisation targets, the dissolution of the NZBA raises concerns regarding transparency and accountability.

2025: pivotal year for private finance’s transition

Launched in 2021, GFANZ was established to coordinate the financial sector’s commitment to achieving net zero emissions by 2050. However, the recent departures of major financial institutions have raised fundamental questions about the future of such coalitions. The alliance’s primary components, including the Net-Zero Asset Manager Initiative (NZAM) and the Net-Zero Insurance Alliance (NZIA), were initially seen as essential for synchronising global decarbonisation efforts. This pivotal year now marks a shift from collective commitment towards individual strategies and a redefined focus on transition finance opportunities in emerging markets.

Assessment of withdrawals

BlackRock’s announcement on 10 January 2025 regarding its withdrawal from the NZAM had a profound impact on the sector. Although the initiative reiterated that climate risk remains a major financial risk, it launched a review of its model to adapt to changing regulatory expectations, particularly in the United States. Following BlackRock, major US banks fled the NZBA. Currently, Amalgamated is the largest US bank remaining in the alliance, representing only a tiny fraction of the market compared to the major banks that exited. The total NZBA assets in the US banking sector fell from $10,330,694 million in 2023 to just $10,597 million by the end of 2024.

When collective climate action raises legal risks

The massive withdrawal of financial institutions is largely attributed to a hostile political and regulatory environment in certain jurisdictions. Following the re-election of Donald Trump, 11 US state attorneys general filed a lawsuit against major asset managers, alleging collusion to force reductions in coal production. This legal pressure argues that joint participation in climate alliances harms fair competition. Furthermore, the interpretation of fiduciary duty in the US often focuses narrowly on immediate financial returns, excluding broader environmental, social, and governance (ESG) considerations. Conversely, other jurisdictions are beginning to support the inclusion of climate risk as part of prudent investment behaviour, creating a fragmented global legal landscape.

NZBA: from new mandate and softer ‘guidance’ to the end

Prior to its dissolution, the NZBA attempted to preserve its membership by softening its requirements. In April 2025, the alliance updated its guidelines to allow for a wider range of trajectories towards carbon neutrality, moving away from a mandatory 1.5°C alignment. Binding ‘guidelines’ were replaced with non-binding ‘guidance’, which was seen by some as a significant loss of ambition. Triodos Bank left the alliance in protest against these changes, arguing the new framework provided too much leeway. The end of the NZBA was finally announced in October 2025, with its final guidance documents presented merely as resources for voluntary use by banks.

The new GFANZ paradigm: a credible response to the climate finance gap?

GFANZ has pivoted its strategy towards closing the global investment gap, particularly in emerging markets and developing countries (EMDCs). The alliance aims to help unlock more than $5 trillion a year in investment opportunities created by energy system modernisation. This shift aligns with international goals to triple finance to developing nations. The challenge remains the lack of ‘bankable’ projects that meet the risk-return profiles required by private financiers. GFANZ is now deploying ‘country platforms’ and Just Energy Transition Partnerships (JETP), such as the $20 billion programme in Indonesia, to coordinate public and private financing for fossil fuel phase-outs.

Up-to-date inventory of banks’ interim targets

A stocktake by the Sustainable Finance Observatory reveals that despite the collapse of the NZBA, the majority of banks, especially in Europe, have maintained their individual sectoral decarbonisation and sustainable financing targets. Analysis of 19 major European banks shows that progress has been made towards achieving 77 sector targets. However, 11 banks reviewed have not yet reduced their carbon footprint related to the sectors they finance. The study emphasises that decarbonisation targets alone are unlikely to generate real-economy impacts without complementary forward-looking and qualitative metrics.

European banks

Most European banks, including Barclays and HSBC, have retained their interim targets even after exiting the NZBA. Barclays confirmed its commitment to mobilising $1 trillion in sustainable financing and remains aimed at becoming a net zero bank by 2050. However, UBS has not explicitly restated its carbon neutrality commitment or decarbonisation targets following its release from the alliance. Deutsche Bank abandoned its specific target for 90% of high-emitting clients to commit to net zero by 2026, citing international dynamics. Meanwhile, groups like ING, Intesa SanPaolo, and NatWest have tightened or updated various financing and sectoral emissions targets.

American and Japanese banks

In North America and Japan, the response to the NZBA’s end has been more varied. Wells Fargo made the notable decision to formally drop its sector-specific 2030 interim financed emissions targets and its goal to achieve net zero by 2050 for financed emissions. Conversely, Scotiabank, MUFG, and Mizuho have explicitly restated their targets in 2025. Scotiabank maintains its commitment to provide $100 billion in climate finance by 2025, having already reached $174 billion since 2019. JPMorgan Chase and Goldman Sachs have provided limited official updates, although they maintain that they will continue to focus on pragmatic solutions for low-carbon technologies.