Triodos Bank left the NZBA in April for very different reasons. It was in direct response to a vote by a majority of member banks that lowered the climate ambition of the alliance and set less strict requirements. As someone involved in Triodos Bank’s decision to leave, I can attest this was not an impulsive move. It followed months of internal debate, discussions with peer banks, and direct conversations with the NZBA secretariat. We faced a dilemma: do we stay in the alliance and attempt to raise ambition from within, or do we acknowledge that, after four years of effort, we failed to shift the agenda towards meaningful climate action and must now make a principled stand? Ultimately, we chose the latter, because it became clear that the NZBA’s ambition was being intentionally lowered to retain the participation of the world’s largest systemically important banks.

Ironically, even this watering down did not keep big banks on board of the NZBA. Despite repeated concessions, several of those same banks have now chosen to leave anyway. Their rationale when entering the alliance at the launch in Glasgow in 2021 - that banks must support customers through the transition - rings hollow when set against their actual financing decisions. In 2024, the world’s biggest banks, including Barclays, JP Morgan Chase, and Bank of America, increased fossil fuel financing by $162 billion, marking a worrying shift in direction after fossil fuel financing had been decreasing since 2021

Voluntary commitments can be useful for setting broad frameworks, tracking progress, and establishing shared standards. They have encouraged investment in renewables and sustainable industries. But the reality is that when real change is required, such as ending new fossil fuel financing, voluntary agreements fail. The moment these commitments begin to threaten established business models and profits, the sector band together to defend its interests. The establishment, boards, lobbyists, and industry groups dominate the debate, suppressing ambition and prioritising short-term returns over long-term planetary health.

This is occurring almost a decade after the Paris Agreement, where countries pledged in Article 2.1 to ‘make finance flows consistent with a pathway towards low greenhouse gas (GHG) emissions and climate-resilient development’. Yet, the vague language of Article 2.1c has allowed the financial sector to delay meaningful action. Ten years on, there is still no consensus on what aligning financial flows with climate goals actually means, and there is no enforcement.

The result? Another lost decade on climate, while the world’s biggest banks continue to bankroll the fossil fuel expansion that is driving the climate crisis.

There is a glimmer of hope. Public pressure is mounting, and shareholders and clients are increasingly demanding that their banks act responsibly on climate. When HSBC announced their exit from the NZBA, energy company Ecotricity said they had left HSBC, and taken its “£600 million green economy turnover elsewhere”. If more customers and investors shift to institutions with genuine sustainability credentials, the power dynamics could start to change. But it is not enough to hope for voluntary change.

The lesson of the NZBA departures is clear: voluntary commitments are no substitute for real accountability. The time for delay is over. If we are serious about avoiding the human and economic costs of unchecked climate change, only the force of law will suffice.

This opinion piece by our chief economist Hans Stegeman was originally published in Sustainable Views.