A significant change in the sustainable finance scene has occurred when Swiss financial behemoth UBS quits the Net-Zero Banking Alliance (NZBA), joining an increasing number of international institutions that have done so. The announcement, made on August 7, 2025, following UBS’s yearly evaluation of its memberships related to sustainability and climate change, highlights a larger trend of large financial organizations reassessing their involvement in group climate action. Launched in 2021 under the Glasgow Financial Alliance for Net Zero (GFANZ), the NZBA sought to bring banking portfolios into compliance with the 1.5°C warming limit set down in the Paris Agreement.

High-profile departures have been caused by strategic changes inside banks and growing political backlash, especially in the United States. In 2025 alone, these exits included Barclays, HSBC, JPMorgan, Citi, Morgan Stanley, Macquarie, and Bank of Montreal. Under the main topics, this article addresses practical concerns while examining the reasons behind UBS quits Net-Zero Banking Alliance, the difficulties facing the NZBA, and the consequences for sustainable finance.

Why Are Banks Leaving the NZBA?

To link lending and investment activities with net-zero emissions by 2050, the NZBA‘s original structure required members to adopt science-based commitments. At its height, this commitment attracted 144 banks with $42 trillion in assets. Threats of legal action and exclusion from state business for banks participating in climate-focused alliances, however, have increased political pressure, especially from Republican politicians in the United States. Due to the challenging climate stemming from the anti-ESG (Environmental, Social, and Governance) mindset, banks are prioritizing operational flexibility over group obligations.

“With that work advanced and with our in-house capabilities strengthened, we have decided to withdraw from the NZBA, like a number of our global peers,” said UBS, a founding member since 2021, about its strengthened internal sustainability capabilities. Similar remarks were made by Barclays, which stated that the NZBA was “no longer fit” to facilitate its transition because other international banks had left. The NZBA’s credibility was further damaged and the exodus was accelerated when it decided in April 2025 to relax mandatory interim targets and switch to non-binding recommendations.

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What Changes Has UBS Made to Its Climate Strategy?

UBS quits Net-Zero Banking Alliance, accompanied by a reevaluation of its climate objectives. In March 2025, the bank deferred its operational emissions target from 2025 to 2035, citing its acquisition of Credit Suisse and an expanded corporate real estate portfolio. UBS also softened its terminology about net-zero commitments and eliminated executive compensation linked to ESG. Instead of aiming to achieve net-zero emissions throughout scope 1, 2, and specific scope 3 by 2050, UBS now supports the transition of the global economy.

Notwithstanding these changes, UBS is dedicated to decarbonization and places a strong emphasis on helping clients comprehend climate risks and possibilities. To link some industries with decarbonization paths, the bank keeps incorporating sustainability into its risk management and stress-testing frameworks. A simplified approach to sustainable governance is indicated by the leadership change, with Beatriz Martin Jimenez maintaining control. Michael Baldinger will step down as Chief Sustainable Officer by July 2025, and Christian Leitz will take over the position in addition to his current responsibilities.

 Also Read: Barclays Exits UN-Backed Net-Zero Banking Alliance, Following HSBC’s Departure

How Does the NZBA’s Future Look After These Exits?

With fewer members, the NZBA is facing severe difficulties. The wave of exits has not been halted by the alliance’s easing of regulations, which aims to accommodate lenders from emerging markets and account for the “slow pace of change” in the actual economy. Triodos Bank is among the critics who contend that the alliance’s aim is undermined by weaker criteria that are out of step with the pressing need to address climate change.

“The need for bold action from the banking sector has never been greater, and NZBA is here to help deliver it,” said a spokesperson for the NZBA, underscoring the alliance’s role in assisting member banks in spearheading the net-zero transition. However, the NZBA’s power is diminishing as big banks like HSBC, Barclays, and UBS choose separate approaches. The following table lists the significant departures for 2025:

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What Does This Mean for Sustainable Finance?

A conflict between individual strategic interests and cooperative climate action is brought to light by the wave of NZBA withdrawals. Instead of giving up on sustainability, banks like UBS and Barclays are exploring customized strategies to strike a balance between customer demands, legal requirements, and commercial realities. With $6.6 trillion in assets under management as of Q2 2025, UBS, for example, is still helping its clients make the shift to a low-carbon economy, and Barclays earned £500,000 in revenue from sustainable finance in 2024.

However, the fragmentation of collective efforts raises concerns about the financial sector’s ability to drive systemic change. The NZBA may be less able to push for the legislative and regulatory changes required to hasten decarbonization due to its weakened structure and the departure of essential actors. The efficiency of separate tactics versus coordinated action remains a topic of debate, with significant consequences for global climate targets, as banks prioritize flexibility.

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Frequently Asked Questions (FAQs)

Q1. Why did UBS decide to leave the NZBA?

Like other international banks, UBS cited the advanced status of decarbonization frameworks and its enhanced internal sustainability capabilities as reasons for its decision. It underlined that its dedication to sustainability has not changed.

Q2. How has political pressure influenced banks’ decisions to leave the NZBA?

Republican legislators in the US have put a lot of pressure on banks by warning them that their involvement in climate-focused alliances could result in legal repercussions and exclusion from state contracts. Many international and North American banks have left because of this anti-ESG mentality.

Q3. What is the NZBA’s current status after these departures?

After losing key members, the NZBA is struggling to remain relevant. It continues to assist the surviving banks in advancing net-zero transitions, despite criticism that its recent relaxation of regulations to non-binding targets undermines ambition.

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