糖心视频

Another business-led effort to fight climate change is unraveling.

On Aug. 27, 2025, the after several major U.S. and European banks backed out.

While most observers are blaming the in the U.S. against climate change action and sustainable investing, we believe the banks didn't need much of a push: These net-zero alliances never made much business sense and at fighting climate change. Indeed, for us the puzzle was why they had flourished in the first place.

To examine their rise and fall, we that encompassed interviews with more than 80 executives from various financial institutions, activist organizations and oil and gas companies.

Powerful allies grasped climate risks

The was founded in 2021. Members agreed to limit lending to carbon-intense sectors so that total greenhouse gas emissions from companies in the banks' loan portfolios are close to zero by 2050.

This target aligned with the goals of the but was not binding and lacked clear shorter-term targets and plans. Similar net-zero networks were established for insurance, asset management and other financial areas, all under the umbrella of the . Over the past 16 months, the and alliances have also suspended their activities.

These net-zero alliances were built on the and that the challenge requires a collective response. Their goal was to leverage the power of finance to push companies to decarbonize their products and processes.

Key financial regulators, central banks and a few of the largest asset managers propelled these alliances because they perceived that climate change poses serious long-term systemic risks to markets and economies around the world. Influential figures such as , the CEO of BlackRock, the world's largest asset manager, and former , now the prime minister of Canada, lent legitimacy to these initiatives.

also supported these alliances as a smart strategy to pressure companies on climate. Many other financial institutions then joined the net-zero bandwagon, but our research revealed that they didn't do so because of concern about climate-related financial risks. Rather, they felt an array of pressure from peers, investors, activists, regulators and even their families.

Many people we interviewed mentioned reputational risk as a key driver and saw a low-carbon transition as inevitable, driven by regulation, technological innovation and consumer demand. This was the Biden era, with billions of dollars flowing to clean energy through the .

The burgeoning field also spawned a specialized but lucrative industry of data providers and consultants who actively marketed carbon management, disclosure and broader sustainability services. The was estimated at more than US$1 billion in 2024 and growing rapidly.

Climate strategy and sustainability reporting was the fastest-growing business sector for . And asset managers were happy to collect 鈥攅ven though these funds have not outperformed the broader market.

These vested interests spurred continued expansion of net-zero networks. Indeed, at its peak in 2024, the Net-Zero Banking Alliance with $74 trillion in estimated total assets, representing over 40% of global banking assets.

Political backlash

Given the size and scope of these net-zero networks, what triggered their rapid collapse?

One major factor, of course, was the against anything connected with climate action and sustainable investing following the 2024 election of President Donald Trump.

Finance have demanded that major asset managers restrict the use of environment, social and governance benchmarks, accusing them of eroding "traditional fiduciary duty" and claiming they hurt investors.

In August, accused organizations created to set standards for corporate climate disclosures of operating an anticompetitive "climate cartel" and violating antitrust laws.

Fossil fuels鈥攖oo lucrative to abandon

While the has indeed been intense, the and the broader is largely due to the and the . Investors and banks, of course, want to keep on financing profitable companies and avoid pressuring their clients to take risky measures.

Oil companies such as BP and Shell that had relatively as a result, prompting them to retreat from these targets and from renewable projects back toward fossil fuels. made the sector even more lucrative. Low-carbon fuels and processes for industries such as aviation, steel and cement are .

Moreover, the Trump administration is abolishing most , while easing regulations and opening more land for oil and gas exploration.

These economic incentives made it hard for the banking alliance to 鈥攁苍诲 into oil and gas projects.

European banks that sharply cut funding to fossil fuel companies saw their and to , which has soared in the past two years. Facing this loss of business, major banks' in 2024, driving loans to a three-year high of $869 billion.

The costs of membership in the net-zero alliances also increased over time, with the adoption of that called for specific plans and timelines for ending fossil fuel financing entirely. The new standards also required loan recipients to , which include emissions from a company's suppliers and customers.

Managers in financial institutions told us that the increasingly complex and demanding requirements were generating strong pushback from their clients. We also heard that membership was turning from a reputational asset to a liability, as of continued fossil fuel lending despite their commitments to phasing it out.

Ignoring climate change's long-term risks

Although banks are rushing back to finance fossil fuel projects, these loans typically have long terms of 10 to 25 years. This means they carry the risk that an eventual transition to clean energy will make these projects ." One study are currently exposed to more than $1 trillion in potential losses.

Why do banks often ignore these risks?

Our interviewees mentioned the organizational silos that separate analysts who assess climate risks from the loan originators. In other words, the employees deciding where to lend money may not be talking to the team that best understands the long-term risks. Moreover, current risk assessment tools are quite crude and don't generate the quantitative metrics that loan underwriters want.

Finally, , or securitized, into the larger corporate debt market, obscuring the risks.

Climate risks are real and growing

The Net-Zero Banking Alliance isn't disappearing entirely. The group is currently into a much weaker "framework initiative" that provides voluntary guidance instead of binding commitments.

And some banks leaving the alliance have and sustainability policies.

But climate risks are real and growing. The that just the physical risks鈥攆loods, drought and wildfires鈥攃ould cost companies up to 25% of their profits by 2050 and substantially cut global GDP.

A will cost trillions of dollars and create massive disruption鈥攁s well as opportunities鈥攁s new technologies and companies emerge. The longer that action is delayed, the greater the risks to the planet鈥攁苍诲 of more drastic shocks to the global economy and financial system.

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