Scan the headlines and it’s easy to assume the world’s biggest banks have walked away from the fight against climate change. Standard Chartered has slashed sustainability roles, Wells Fargo scrapped its green-lending plans and HSBC left the Net-Zero Banking Alliance (NZBA), a member-led group that supports banks in achieving climate-mitigation goals in line with the Paris Agreement.
American banks including Goldman Sachs and Morgan Stanley have also exited the NZBA, as have some Japanese and Canadian firms. The Institute for Energy Economics and Financial Analysis, a think-tank, estimates that the leavers account for two-fifths of the group’s total assets.
This shift comes at a critical time, when capital is urgently needed to fund the global energy transition. The International Energy Agency estimates that clean-energy investment must exceed $4tn (£3tn) annually by 2030 to stay on track for net zero. That level of investment cannot be achieved without leadership from the financial sector.
Banks have been criticised for backsliding on sustainability commitments, but the reality is more nuanced. Although financial institutions often struggle to align their operations with climate goals, they have not abandoned sustainability altogether. Instead, they may be entering a more pragmatic phase of green finance.
Net-zero has become controversial in the current political climate. In the US, Republican senators have argued that participation in climate-focused alliances could violate antitrust laws. And such climate scepticism has gained momentum since Donald Trump’s return to the White House.
Against this backdrop, finance institutions that remain committed to decarbonisation have become more cautious about promoting their efforts publicly. Banks are shifting away from grand declarations and focusing instead on climate initiatives that are more measurable and aligned with their core business models. Firms are ditching vague carbon-offsetting pledges in favour of science-based targets and shifting from blanket divestment policies to more strategic engagement with clients on transition planning.
Take HSBC, which is still piling into sustainable finance even as it steps away from climate alliances. The bank announced $54.1bn (£40.6bn) in sustainable financing in the first half of 2025, up 19% from a year earlier.
Large multinational banks are still structuring and underwriting billions in ESG-related products and demand for climate capital hasn’t cooled. Private equity and infrastructure funds are also channelling billions into clean tech, energy transition projects and climate resilience. A recent BloombergNEF report shows global investment in the energy transition hit a record $2.1tn (£1.6tn) in 2024.
NatWest doubles climate target
Last week, NatWest pledged to facilitate £200bn in climate and low-carbon transition finance by the end of 2030, doubling its previous £100bn target. This commitment is part of its new climate and transition finance framework, which will see the lender support a much wider range of industries, including hard-to-abate sectors such as iron, steel and cement.
In this environment, commitments such as this are proof that financial institutions can still pursue net zero, despite mounting scepticism in parts of the political and financial world. Of course, targets are just the start. NatWest will need to show how this capital is deployed, what outcomes it delivers and how it manages the trade-offs inherent in transition finance. But, by raising the bar, the bank has made a statement: it is prepared to lead while others waver.
This is a positive sign that net zero remains critical to forward-looking strategy in the finance sector. The hope is that NatWest’s actions will encourage others to realise that taking action is beneficial to their bottom lines, no matter what politicians say or do.
The sector’s climate journey is far from perfect – but it’s also far from over.
Scan the headlines and it’s easy to assume the world’s biggest banks have walked away from the fight against climate change. Standard Chartered has slashed sustainability roles, Wells Fargo scrapped its green-lending plans and HSBC left the Net-Zero Banking Alliance (NZBA), a member-led group that supports banks in achieving climate-mitigation goals in line with the Paris Agreement.
American banks including Goldman Sachs and Morgan Stanley have also exited the NZBA, as have some Japanese and Canadian firms. The Institute for Energy Economics and Financial Analysis, a think-tank, estimates that the leavers account for two-fifths of the group’s total assets.
This shift comes at a critical time, when capital is urgently needed to fund the global energy transition. The International Energy Agency estimates that clean-energy investment must exceed $4tn (£3tn) annually by 2030 to stay on track for net zero. That level of investment cannot be achieved without leadership from the financial sector.
