Crédit Mutuel Asset Management: Public disengagement from sustainability goals: The case of the Net Zero Banking Alliance

By Armand SATCHIAN, Sustainable Investment Research Analyst, Crédit Mutuel Asset Management

Crédit Mutuel Asset Management is an asset management company of Groupe La Française, the holding company of the asset management business line of Credit Mutuel Alliance Fédérale.

Up until a couple of months ago, the Net Zero Banking Alliance (NZBA) was gaining traction. Then came the nomination of Donald Trump which reshuffled the cards and no doubt partly justifies the withdrawal of several North American banks[1]. Goldman Sachs withdrew from the alliance in December 2024, marking an end to a year which until then had been promising. The NZBA had continued to attract new members including Eurobank Holdings SA, Principality Building Society, SBAB Bank or Bank of Queensland, while certain banks began to withdraw from the Science Based Targets initiative[2]. In its latest report[3], the NZBA’s ability to stimulate engagement from the banking sector in 44 countries as well as its capacity to provide guidance to its members was apparent. By the end of May 2024 – 118 alliance banks had set decarbonization targets, 76 had published a transition plan, etc. Despite being sometimes criticized for its lack of clarity in regards to decarbonization targets requirements, the alliance has managed to secure the commitment of over 140 banks representing more than $56 trillion in assets[4]. However, the NZBA now has to address a new challenge – the public disengagement of a number of stakeholders from sustainability initiatives.

This trend is not limited to the banking sector, but also extends to regulators such as the Federal Reserve (Fed), which withdrew from the Network for Greening the Financial System (NGFS) initiative in January 2025[5], as well as asset managers such as Blackrock, which also left the Net Zero Asset Managers (NZAM) initiative in January 2025[6]. Disengagement not only extends to environmental issues but also to social issues. In early 2025, major corporations, including Alphabet , Disney, McDonald’s, Ford and Meta either abandoned or scaled back their Diversity, Equity and Inclusion (IED) programs[7]. This trend is widespread in the United States following Trump’s return to office. His campaign against sustainability-related themes has led to general skepticism regarding sustainability initiatives. According to the What Directors Think study[8], 85% of US board members believe that taking a stance on social issues could lead to a potential loss of clients (vs. 71% in 2017). Thus, while American Vice President JD Vance[9] criticized so-called “freedom of speech” in Europe, several American stakeholders seem to think it best to avoid addressing sustainability issues publicly. It is too early to tell whether this public disengagement will systematically lead to a decline in sustainability efforts, particularly among less vocal players. Some interpret this shift as a simple evolution in ESG risk management, favoring concrete actions over public declarations. In some cases, disengagement has been accompanied by communication intended to be reassuring. North American banks, for example, quickly reiterated their intention to pursue their initiatives relative to the low-carbon transition. However, only 2025 annual integrated reports/sustainability reports will start to reveal the real impact of disengagement on the credibility of their sustainability strategies.

These postures remain, nonetheless, preoccupying because they limit open debate, hinder the progress made by collective action and, paradoxically, imply that it is unwise to publicly address growing sustainability risks. Indeed, this disengagement occurs at a pivotal moment. Scientists have proven that limiting global warming to below 1.5°C is not possible[10]. In addition, in its latest report on global risks[11], the World Economic Forum highlighted that the polarization of society, which affects its stability, is one of the major short-term risks. In the long term, this same report indicates that the four most critical global risks are climate-related (extreme weather events, biodiversity loss and ecosystem collapse, critical change to Earth systems, natural resource shortages). In addition, addressing climate risk will be increasingly complicated as the probability of occurrence can no longer be assessed solely with historical data[12].

Meeting these challenges requires that economic stakeholders be well prepared. While public engagement does not guarantee the achievement of defined objectives, it certainly gives the various stakeholders the opportunity to debate the pertinence of proposed measures. It also creates a market dynamic that supports all players, regardless of their resources. Five smaller North American banks have so far decided to remain part of the NZBA and not follow in the footsteps of their fellow US banks. According to a recent report from the Transition Pathway Initiative (TPI)[13], most major banks, current and former members of the banking alliance, still have a long way to go in their low carbon transition. However, it is worth highlighting that the alliance has been playing a crucial role in raising collective awareness regarding future necessary action. Updated NZBA guidelines, published in March 2024 emphasized, for example, the need to address a key issue - the integration of “facilitated emissions” (emissions resulting from capital markets activities) into banks' decarbonization goals.

Through disengagement, banks are no longer held accountable towards the initiative. In light of the four most critical global risks mentioned above, we can only hope that economic stakeholders will uphold their environmental and social commitments. However, due to the unstable political context, it is reasonable to wonder what would drive them to do so. Investors have a strong lobbying power and can greatly influence stakeholders to remain on target; certain investors have already publicly stated the importance of maintaining a strong climate commitment[14] backed by robust legislation[15].