Doubts over the financial sector’s commitment to climate goals have emerged after the UN-backed Net Zero Banking Alliance (NZBA) was forced to close. The group shut down last month after key members, including banking titans HSBC and Barclays, abandoned the initiative.
The alliance, once praised as a major step forward for green finance, saw its support crumble after US banks like JP Morgan and Goldman Sachs departed. This was followed by the withdrawal of UK lenders, effectively sealing the group’s fate.
Despite the collapse, a top Bank of England regulator has pushed back against concerns. David Bailey of the Prudential Regulation Authority (PRA) insisted that UK banks’ engagement on climate issues “remains as vibrant… as it has over the past couple of years.”
The PRA, which was the first major central bank to run climate-specific stress tests in 2021, maintains that its focus is on the financial risks of climate change. However, the regulator has faced criticism for not yet forcing banks to set aside more capital to cover potential losses from financing heavy polluters.
Bailey emphasized that while climate risk is “important,” the regulator must balance it “in proportion” with other emerging dangers, suchas the unregulated private credit market.