On August 26th, the enthusiasm of the world's largest banks for "net zero emissions" targets has rapidly and quietly waned over the past year. Multiple top-tier financial institutions have withdrawn, weakened, or completely abandoned their previously established Environmental, Social, and Governance (ESG) policies. This trend has emerged not only among North American banking giants but is also spreading to London and other global financial centers.
Industry data reveals that after JPMorgan Chase, Citigroup, Bank of America, and Wells Fargo exited the Net-Zero Banking Alliance (NZBA), North America's influence within the alliance has virtually disappeared. This indicates that global financial institutions still face significant challenges in their long-term commitment to sustainable development strategies, with short-term economic pressures in financial markets creating clear conflicts with green finance objectives.
The decline in execution intensity of ESG policies within the banking industry has become more pronounced. Bloomberg New Energy Finance Senior Sustainable Finance Researcher Maia Mesanger noted that while some financial institutions are reassessing their climate targets, early-launched green projects may still continue to advance. The extent to which banks consider climate risks in investments and lending largely depends on policy environment stability and regulatory intensity. However, Scott Lane, founder of ESG service provider Speeki, emphasized that banks themselves are part of the problem. He pointed out that many programs were poorly designed from the outset, failing to adequately demonstrate value to shareholders and customers, making them difficult to sustain subsequently.
Data shows that HSBC has postponed its net-zero target by 20 years while suspending the establishment of a dedicated carbon credit trading department. Barclays and NatWest have also removed climate targets from executive bonuses, revealing clear contradictions between financial institutions' green commitments and short-term commercial interests. This phenomenon reflects the industry's widespread lack of substantial execution and measurable outcomes in sustainable finance practices.
Cost control and strategic adjustments have further intensified banks' retreat from green commitments. To address investment return pressures and operational expenses, banks are cutting investment banking operations, reducing European operational scale, and reassessing the commercial value of ESG projects. Industry data indicates that financial institutions still face serious challenges in climate scenario analysis (CSA) and data acquisition, directly affecting their ability to assess climate-related risks, including geography-specific physical risks such as floods, heat waves, and wildfires.
Meanwhile, the Global Green Finance Index shows that ESG scores of major financial centers have generally declined, with London losing 36 points in the latest report, marking a weakening commitment to green finance among top-tier financial centers. While policy changes and cost pressures provide banks with "reasonable justification" for slowing sustainable investments, with continued global attention to climate issues and green finance, financial institutions may reassess and strengthen their green strategies in the future to address long-term risks and market expectations.
Overall, the green commitments of the global banking industry are experiencing repeated fluctuations. This retreat stems not only from external environmental and policy pressures but also reflects deficiencies in sustainable development strategy design and execution within financial institutions themselves. Although ESG investments and net-zero commitments face challenges in the short term, with improvements in data analysis capabilities, strengthened regulatory requirements, and increased market attention to climate risks, financial institutions may restart green finance programs to achieve more robust and sustainable long-term development. Effective ESG strategies should balance commercial value, policy execution, and long-term climate risk management.