In a stunning blow to global climate finance efforts, the Net-Zero Banking Alliance (NZBA)—the world’s largest climate coalition for financial institutions—has suspended its operations and is now polling remaining members on whether to dismantle its membership structure entirely.
This development, announced on August 27, 2025, follows a mass exodus of major banks from Wall Street and beyond, effectively erasing the alliance’s presence in North America and eroding its influence in Europe, Japan, and Australia.
The NZBA’s potential collapse underscores a broader retreat by banking giants from ESG (Environmental, Social, and Governance) principles and Net Zero commitments, amid political pressures and shifting investor priorities.
The Wave of Exits: From Wall Street to Global Retreat
The NZBA, convened by the United Nations Environment Programme Finance Initiative (UNEP FI), was launched in 2021 to align banking portfolios with net-zero emissions by 2050. At its peak, it boasted over 140 members managing trillions in assets. However, the alliance began unraveling in late 2024, accelerated by the U.S. presidential election outcome and Republican-led scrutiny of “woke capitalism.”Wall Street led the charge. By early 2025, all six major U.S. banks had withdrawn: JPMorgan Chase, Citigroup, Bank of America, Morgan Stanley, Wells Fargo, and Goldman Sachs.
JPMorgan, the last to leave on January 7, 2025, cited the need for independent climate strategies amid antitrust concerns and regulatory risks.
Democrats in Congress, including Rep. Maxine Waters, pressed these institutions for explanations, highlighting fears that the exits could undermine transparency and trust in climate commitments.
The contagion spread internationally. In July 2025, HSBC became the first major non-U.S. bank to depart, followed by Barclays in August and UBS shortly after.
Barclays’ statement noted that with most global peers gone, continued membership no longer aligned with its goals.
Even asset managers like BlackRock have scaled back from related initiatives, signaling a partisan divide in finance.
Reasons for the departures vary but often include political backlash—particularly from U.S. Republicans accusing alliances of colluding to restrict fossil fuel lending—and practical challenges like inconsistent standards and litigation risks.
A report noted that exiting banks, including JPMorgan and Bank of America, continued to ramp up fossil fuel financing, with investments soaring in 2024-2025 despite their prior net-zero pledges.
Oil and Gas: Rewarding Shareholders Amid Boom Times
As banks distance themselves from restrictive climate goals, the oil and gas sector has doubled down on delivering value to investors through unprecedented shareholder returns. In 2024, the six major supermajors—BP, Chevron, Eni, ExxonMobil, Shell, and TotalEnergies—distributed a record $119 billion in payouts, surpassing the previous year’s high.
Globally, the industry handed out nearly $213 billion in dividends and $136 billion in share buybacks from January 2024 to mid-year, fueled by elevated oil prices and disciplined capital spending.
Companies like Shell have committed to ongoing buybacks, announcing a $3.5 billion program for Q1 2025—the 13th consecutive quarter of at least $3 billion in repurchases—while boosting LNG production targets.
Chevron returned $27 billion to shareholders in 2024 but resorted to workforce reductions of up to 20% to sustain these payouts, prioritizing investor rewards over expansion.
Even amid production challenges, majors like ExxonMobil have borrowed billions to fund dividends and buybacks, emphasizing cash returns in a volatile market.
This strategy has made oil and gas stocks attractive for income-focused investors. For instance, APA Corp. and others have highlighted increasing dividends and buybacks as key to shareholder appeal in 2025.
However, analysts warn that softening oil prices could threaten these record-breaking distributions in late 2025.
Wind, Solar, and Storage: Growth Potential vs. Modest Shareholder Payouts
In contrast, the renewable energy sector—encompassing wind, solar, and battery storage—has focused more on reinvesting profits into expansion rather than aggressive shareholder returns. While the industry saw robust growth in 2024-2025, with U.S. solar capacity additions projected to rise 30% year-over-year and onshore wind installations up 40% in Q1 2025, direct cash returns to investors have been comparatively modest.
Top players like NextEra Energy, Brookfield Renewable, and Clearway Energy have prioritized building out infrastructure, driven by policy incentives like the Inflation Reduction Act. NextEra, a leader in wind and solar, added gigawatts of capacity but emphasized long-term growth over immediate dividends
Battery storage saw a surge in M&A activity in 2024, with private equity and utilities snapping up assets to capitalize on grid needs, but this has translated to capital appreciation rather than buybacks.
Stocks like First Solar and GE Vernova are touted for 2025 upside due to manufacturing investments—totaling $9.4 billion in new projects in Q1 2025—but shareholder yields remain lower than in oil and gas, as profits fund R&D and scaling.
Utilities involved in renewables, such as Ameren and CMS Energy, offer stable dividends, but overall, the sector’s returns pale against fossil fuels’ cash bonanza.
Implications for the Energy Transition – And those Investors looking for returns
The NZBA’s suspension marks a pivotal retreat from collaborative climate action, potentially slowing the flow of capital to green projects and emboldening fossil fuel investments.
As Wall Street pivots toward shareholder-friendly oil and gas plays, the renewables sector must navigate higher interest rates and policy uncertainties to deliver competitive returns. This divergence highlights a stark reality: while fossil fuels reward investors today, the long-term viability of the energy transition hinges on sustained innovation and regulatory support. For now, the scales tip toward traditional energy, but the climate clock keeps ticking.
It is also essential to consult your certified financial planner or CPA regarding your tax issues. There are tax-advantaged investments in the oil and gas space that offer cash flow similar to real estate, as well as Tax benefits.
The same thing goes for EVs. When the insurance companies stop doubling the insurance rates on the homes where they are located, and the car policies double just by adding the EV, you may see a larger adoption of EVs. Insurance companies and banks can change behavior.
Avoid Paying Taxes in 2025
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