The crisis-hit Net Zero Banking Alliance has proposed abandoning its membership structure in favour of becoming a "framework initiative" after losing most of its major banking members following political pressure and changing climate policies.

The global banking climate group announced that members will vote by the end of September on transforming from a "membership-based alliance" to a looser guidance body that would provide decarbonisation frameworks without formal membership obligations.

The proposal follows a mass exodus of major financial institutions that began after Donald Trump's presidential election victory in November 2024.

Goldman Sachs announced its departure in December, followed by JP Morgan, Citigroup, Bank of America, Morgan Stanley and Wells Fargo, completing Wall Street's abandonment of the alliance by January.

North American banks continued the trend with Royal Bank of Canada, Bank of Montreal and Toronto-Dominion Bank all departing at the end of January.

European institutions followed suit, with HSBC leaving in July and Barclays in August, stating the group "no longer has the membership to support our transition".

Swiss lender UBS became the latest major departure earlier this month.

The alliance, established in 2021 ahead of climate talks in Glasgow, originally required members to commit to reaching net-zero emissions by 2050, set interim emission-reduction targets for carbon-intensive sectors by 2030, and submit annual progress reports.

Many banks cited political pressure from US Republican politicians who argued that membership could breach antitrust rules.

The industry has increasingly retreated from environmental, social and governance policies following Trump's return to power under his "drill baby drill" platform.

In a statement, the alliance said it "remains focused on supporting the many banks that are leading this transformation" and that "the need for bold, resolute action from the banking sector has never been greater".

However, not all banking leaders supported the departures.

Bill Winters, chief executive officer of Standard Chartered, criticised peers for abandoning commitments when they were no longer "fashionable".

The alliance's steering group believes the proposed framework model represents "the most appropriate model to continue supporting banks across the globe to remain resilience and accelerate the real economic transition in line with the Paris Agreement".

Critics have questioned the effectiveness of voluntary commitments.

Lucie Pinson, director of Reclaim Finance, described the changes as a way to "avoid the embarrassment of losing relevance as its largest members gradually withdraw", calling the situation "absurd" given the group had never "truly challenged the fossil fuel-oriented business models of major banks".

Katrin Ganswindt, head of financial research at Urgewald, echoed this pessimism, stating: "When the world is on fire, we need climate action, not climate talk. Voluntary alliances like NZBA did not deliver. Fossil fuel finance needs effective regulation, which would also improve the financial system's resilience."

The proposed transformation reflects broader challenges facing climate initiatives in the financial sector, with similar investor groups also reviewing their structures following member departures.

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