The shutdown of the Net Zero Banking Alliance (NZBA) represents a profound failure of collective action in the face of a collective threat. The banking industry, confronted with the systemic threat of climate change, has proven unable to maintain a united front, with its primary collaborative body collapsing under political pressure.
Climate change is a collective threat that requires a coordinated, global response. The NZBA was created to be a core part of that response within the financial sector, a platform for banks to work together to manage the transition to a net-zero economy.
However, this effort at collective action failed its first major stress test. When faced with the divisive “anti-woke” politics that followed Donald Trump’s re-election, the impulse for self-preservation overwhelmed the spirit of collaboration. The six largest US banks chose to protect their individual interests by leaving the group.
This shattered the collective. The departure of key members like JPMorgan Chase and Bank of America, followed by international peers like HSBC, demonstrated that the alliance was a fragile coalition, not a robust collective capable of withstanding adversity.
This failure now raises serious doubts about the financial industry’s capacity for self-governance on major global challenges. If the sector cannot maintain collective action on an existential threat like climate change, critics argue, then it proves that such action must be imposed from the outside. The responsibility for coordinating the response, they contend, must now fall to the only entities capable of enforcing it: government regulators.