Letter from Europe: Western retreat raises doubts over climate leadership

After years of pursuing ideologically driven climate leadership, Western powers are now stepping back under mounting political pressure and rising populist opposition—prompting concern essential climate action could be sidelined

The UN-backed Net-Zero Banking Alliance (NZBA)—once the flagship coalition of global lenders committed to decarbonising finance—formally ceased operations following a vote by its members on 3 October. The decision marks the end of a major chapter in climate finance that began in 2021 with lofty ambition but ultimately succumbed to political headwinds and dwindling industry participation. Established under the UN Environment Programme Finance Initiative, the alliance at its peak brought together nearly 150 banks representing more than 40% of global banking assets. Members had pledged to align their lending and investment portfolios with a net-zero pathway by 2050. Yet withdrawals accelerated