HSBC Faces Backlash After Exiting Net-Zero Banking Alliance

In July 2025, HSBC, one of the world’s largest banking institutions, triggered strong criticism from climate-conscious clients and stakeholders by withdrawing from the Net-Zero Banking Alliance (NZBA), the world’s largest industry group committed to aligning banking practices with climate goals. This move marked HSBC as the first major U.K. bank to exit the alliance and raised concerns about the financial sector’s dedication to supporting global net-zero emissions targets. Several clients, including green energy companies, have publicly severed ties with the bank, citing a loss of trust in its environmental commitments.

Background: What is the Net-Zero Banking Alliance (NZBA)?

Launched in April 2021, the NZBA is a global coalition of banks convened by the United Nations Environment Programme Finance Initiative (UNEP FI). Members commit to aligning their lending and investment portfolios with net-zero emissions by 2050, in line with the Paris Agreement. Signatories must set interim targets every five years and disclose progress transparently. The alliance seeks to mobilize the banking sector toward climate-resilient and sustainable finance pathways.

HSBC’s Withdrawal and the Rationale

HSBC’s exit from the NZBA followed statements by its Chief Sustainability Officer, Julian Wentzel, who warned against what he described as an increasing bias against carbon-intensive industries. The bank’s position reflects a strategic pivot—a belief that supporting traditional energy sectors is essential for economic stability, especially during the energy transition. However, this move has raised ethical and reputational questions, particularly in light of previous public climate pledges made by the bank.

Client Backlash and Public Reaction

Prominent green business leaders reacted swiftly. Ecotricity, a leading renewable energy firm with a £600 million green turnover, publicly cut ties with HSBC. Its founder, Dale Vince, announced the switch to Lloyds Banking Group, citing customer awareness and the growing importance of ethical banking choices. Vince’s statement emphasized the rise of grassroots pressure from individuals and companies demanding financial accountability on climate issues.

Implications for Banking and Climate Finance

HSBC’s decision could create a domino effect by encouraging other financial institutions to reconsider their environmental affiliations—or, conversely, it could isolate the bank amid increasing global climate scrutiny. It also reignites the debate between climate idealism and pragmatic finance, where banks balance emissions reduction targets with investments in transitional fossil fuels. Regulators, investors, and customers may now evaluate banks more closely based on climate transparency, sustainability criteria, and social responsibility.