HSBC has received a fair amount of criticism after it revealed that it was quitting the Net Zero Banking Alliance, a member-led initiative supporting banks to lead on climate mitigation, on 11 July. Was its decision justified, or has the bank come under fire for good reason?
While HSBC follows in the footsteps of a number of banking giants in leaving the Net Zero Banking Alliance, namely Citigroup, Morgan Stanley, JPMorgan Chase, Wells Fargo, Bank of America, and Goldman Sachs, it is the first institution based in the UK to back out.
Currently, Barclays, Lloyds, NatWest, and Standard Chartered are UK banks that remain in the Alliance, although concerns have arisen that the latest exit may signal the start of a worrying trend for this region.
In a statement, HSBC said that “the Net Zero Banking Alliance played a role in developing guiding frameworks to help banks establish their initial target-setting approach”. With this foundation in place, it decided to take inspiration from its global banking peers and withdraw from the Alliance.
It said that it plans to continue work towards updating and implementing its Net Zero Transition Plan later this year and will “remain engaged” with the Glasgow Financial Alliance for Net Zero.
The move will likely see HSBC come under increased scrutiny and accountability for hitting its net zero targets, but is this the best approach for the UK bank to take?
Pushing for better standards
In April, Triodos Bank, the ethical bank best known for its focus on sustainable banking, also ditched the Net Zero Banking Alliance, after the majority of member banks voted to lower the climate ambition of the alliance and set less strict requirements.
“We weren’t comfortable with the lack of ambition and the recent watering down of accountability,” explained a spokesperson for the bank. “For us, there’s a big difference between leaving to avoid responsibility, and leaving because the standards aren’t strong enough. We continue to advocate for stricter climate policies and alignment of all loans and investments with the 1.5 degrees Celsius global warming scenario.”
In a statement released at the time, Triodos explained its own stance for the future: “We hope that the NZBA continues to push for stronger and more effective measures to ensure a sustainable future for all. We will continue to influence the financial sector by advocating for stricter climate policies and aligning loans and investments with the 1.5 degrees Celsius global warming scenario”.
Disappointed customers
While Triodos pushed for loftier sustainability targets, HSBC’s motivations look unlikely to be the same. As a result, some of its customers have decided to vote with their feet.
One such example is Dale Vince, founder of Ecotricity, the British energy company specialising in selling green energy to consumers, and chairman of famously eco-conscious Forest Green Rovers FC, who took to social media to share his frustration following HSBC’s decision.
“HSBC have left the Net Zero Alliance – pleased to say we just left them and took our £600million green economy turnover elsewhere,” Vince explained in a LinkedIn post. “All companies that believe in net zero, aka the green economy, should ditch HSBC,” he continued.
“Every purpose-led business, like Ecotricity, should be considering the environmental impact of their banking,” said Roger Hattam, director of retail banking at Triodos Bank UK, in response. “It is a large part of any organisation’s carbon footprint. We believe the finance industry has a moral responsibility to take much faster action to address the climate crisis, and if an organisation moves money away from a fossil-fuel-funding bank, it is making a clear statement. Having financed Dale’s first wind turbine in 1995, we have continued to support Ecotricity on a number of business lending projects, and we really value our relationship with them as trailblazers in the renewable energy sector.”
Underestimating public pressure?
“HSBC’s decision to leave points to a broader pullback from collective climate action – not because collaboration doesn’t work, but because it has become more politically difficult,” comments Ioannis Ioannou, Associate Professor of Strategy and Entrepreneurship at London Business School.
“In the US, the backlash is ideological, with climate, sustainability and ESG issues caught up in wider cultural and political debates. In the UK and Europe, the criticism is more practical, focused on concerns about economic growth, energy costs, and global competitiveness.
“HSBC may have underestimated this difference. Its exit seems to reflect a misreading of the UK context, where expectations around climate action remain strong. The response from Ecotricity, which cut ties with the bank, and Ed Miliband’s recent ‘State of the Climate‘ address, both signal that public and political pressure to stay committed to net zero is increasing. These reactions could trigger a broader ripple effect, where other clients, investors, or partners begin to question their ties with HSBC based on its climate stance.
“Could this make HSBC more accountable for delivering on its climate goals? It’s possible—but only if external actors, such as civil society, investors, or regulators, decide to apply pressure. By leaving NZBA, HSBC loses the shared rules and benchmarks that came with it. From now on, its climate strategy will be judged entirely on its own terms. If the bank believes this move will lead to less scrutiny, it may be mistaken. Unless it can present a credible, transparent, and ambitious plan, HSBC risks facing even tougher questions about whether it is serious about the climate commitments it says it supports.”
A ‘a dangerous disconnect’
Nick Spicer, CEO of solar energy company Your Eco, also shared concerns about HSBC’s decision with The Fintech Times. He said: HSBC’s departure from the Net Zero Banking Alliance comes at a critical moment when UK infrastructure faces unprecedented climate pressures.
“Recent heatwaves have exposed vulnerabilities in our energy grid, while insurance costs for climate-related damages continue to soar, making the case for clean energy financing more urgent than ever.
“The NZBA provided crucial frameworks for banks to assess climate risks in their lending portfolios. Without this collaborative structure, individual banks may struggle to adequately price climate risk, potentially leading to underinvestment in resilient infrastructure precisely when we need it most.
“This trend away from collective climate action is particularly concerning given the UK’s ageing energy infrastructure. As extreme weather events become more frequent, the financial sector’s role in funding adaptive, renewable energy solutions becomes critical for national resilience.
“The irony is stark: as climate risks intensify and insurance premiums reflect these realities, banks are stepping back from the very frameworks designed to channel capital toward solutions. This creates a dangerous disconnect between escalating climate costs and the financial mechanisms needed to address them.
“Rather than signalling greater accountability, HSBC’s exit may reflect a retreat from the long-term thinking required to address systemic climate risks. The UK needs financial institutions that recognise clean energy investment not as an ESG obligation, but as essential infrastructure for economic stability in an increasingly volatile climate.”
Political influence
“With the political shift under the current US administration, the trend of major American banks stepping away from the Net Zero Banking Alliance comes as no surprise. Unfortunately, with HSBC becoming the first British bank to follow suit, we are now seeing the ripple effect reach Europe,” explains Sammi Gower, director of sustainability consulting at R. Agency.
“This move comes at a time when large corporations on both sides of the Atlantic: Google, Microsoft, Shell and Unilever among them, are pulling back from public-facing sustainability communications in an act of ‘greenhushing’. However, it is important to recognise that this hasn’t necessarily signalled a drop in actual climate investment or action. In many cases, companies continue to make progress, albeit more quietly.
“After a decade of splashy sustainability pledges, many companies are now adjusting targets based on better data and shifting into a more complex phase of implementation. This kind of work being less newsworthy, combined with a more politically polarised and legally challenging environment, makes it unsurprising that some firms are choosing to communicate less.
“Although this silence has raised concerns about transparency and reduced competitive pressures, the key question is not the lack of communication itself, but whether this results in weakened ambition or diluted accountability. In HSBC’s case, the bank has not rolled back any climate targets to date. The real test will come with its updated climate strategy later this year, where we will see if greater freedom has reduced its ambitions or not.”
Will we simply have to wait and see?
“Economic and political pressures globally can speed up C-suite ‘turnover’, and leadership changes often prompt a rethink of strategy,” adds Mimi Brown, director of corporate at public relations firm The PHA Group. “This pressure has certainly accelerated in the past 12 months, and in turn, so have changes to net-zero strategies.
“Major banks are not alone in creating a distance from decarbonisation or ethical business certifications, bodies and alliances in recent months, and recent B-Corp backlash has shown a growing scepticism around the purpose and efficacy of such systems.
“There is, as they say, a strength in numbers and as the Net Zero banking Alliance shrinks, there is a huge risk of dilution of the financial sector’s commitment and impact, as well as potentially hindering the speed and measurement of progress.
“Despite withdrawing from the NZBA, HSBC has reiterated its commitment to implementing the framework and delivering on its 2050 net-zero commitments. Unfortunately, though, the proof will only be in the pudding, years down the line.
“We can surmise the impact of US political pressure on recent bank exits from NZBA exits – a trend we’re seeing in many sectors. But most committed companies have already invested in transformation to support lower carbon operations, and will continue to ‘do the work’, just quietly. So, back to that pudding.”
Can HSBC step up?
Dr Anastasia Mylona, technical director at CIBSE, a professional engineering institution which is regularly consulted by governments on engineering, net-zero, and sustainability issues, is also waiting to see what actions towards net-zero HSBC takes next.
“HSBC’s departure from the Net Zero Banking Alliance raises important questions about how institutions pursue decarbonisation, particularly the balance between collective frameworks and internal accountability. While the move may appear to signal a weakening of coordinated climate action, it could also reflect a shift towards independently defined strategies and metrics.
“In the built environment sector, we know that clarity, transparency and consistency are essential. As the global professional body that develops authoritative guidance on reducing both operational and embodied carbon in buildings, CIBSE sees collaboration as critical to building momentum and aligning action across sectors. A great example of collaboration is the UK Net Zero Carbon Buildings Standard.
“But accountability cannot be outsourced. Clear, science-based targets and credible delivery plans must underpin any organisation’s net-zero ambitions. Whether through alliances or direct commitments, financial institutions like HSBC have a powerful influence over the pace and scale of decarbonisation, particularly in the construction and property sectors. The real test is not in who they align with, but in how they deliver on their pledges, invest in low-carbon solutions and support emissions reduction throughout the value chain.”
More independent action, less collaboration?
Rather than a step away from accountability, Naeem Siddiqi, senior risk advisor at SAS, believes HSBC’s move is indicative of a trend towards how banks approach boosting their sustainability.
“HSBC’s recent decision to exit the NZBA doesn’t signal a retreat from its climate commitments. Rather, it illustrates a wider industry shift toward greater autonomy in how banks pursue their sustainability goals.
“At SAS, we’re seeing firsthand how banks are evolving their ESG strategies, while keeping climate action and net-zero targets a priority. They are making strategic investments in climate analytics infrastructure, climate scenario modelling and stress testing capabilities. These tools help them better measure and manage both physical and transition risks, as well as identify economically sustainable ways to reduce financed emissions across their portfolios.
“SAS’ recent risktech study with FT Longitude also underscores banks’ ongoing commitment to promoting sustainability. Among 300 senior risk management leaders surveyed, 59 per cent indicated that climate risk is influencing their approach to risk modelling ‘a lot’ or ‘to a great extent’. That places climate risk among the top factors driving risk management modernisation today.
“Keep in mind, too, that even as many banks are choosing to pursue more individualised approaches, industry-wide efforts to align on standards for measurement, reporting, and target-setting continue through global institutions like the Bank for International Settlements, the UN Environment Programme and others. The exchange of best practices and promotion of transparency will continue to drive progress toward net-zero even as banks pursue their targets more independently.”
