According to Financial Times News, the Glasgow Financial Alliance for Net Zero is unraveling with major sectoral alliances collapsing in recent months. The Net-Zero Banking Alliance voted to cease operations last month following exits by big US and UK banks, while the asset management alliance suspended operations in January and the insurance group disbanded in 2024. This represents a dramatic reversal from COP26 in 2021 when Mark Carney announced $130 trillion in financial sector assets committed to climate action. Meanwhile, fossil fuel financing by the 65 largest global banks increased by $162.5 billion last year to $869 billion. The political pressure comes from US Republican officials who argue these alliances may breach fiduciary duty and antitrust rules.
Political backlash meets business reality
Here’s the thing: the climate finance world is getting squeezed from both sides. On one hand, you’ve got Republican state governments actually pulling business from financial institutions involved in these alliances – they went after BlackRock, for crying out loud. That’s serious pressure. But let’s be honest, the political stuff just gave cover for what many institutions probably wanted to do anyway. When fossil fuel financing jumps by $162 billion in a single year, you can’t pretend this is purely about political pressure. The money’s just too good, and banks aren’t exactly known for turning away profitable business.
Pension funds double down
Now here’s where it gets really interesting. While the banks and asset managers are running for the exits, pension funds are actually getting more aggressive about climate risk. The Net Zero Asset Owner Alliance has only lost two members in the past year. European pension funds in particular are flexing their muscles – we’re talking about $1.5 trillion in assets warning managers they’ll get dropped if they don’t step up on climate engagement. The People’s Pension actually pulled £28 billion from State Street, and Dutch fund PFZW moved €14 billion away from BlackRock. That’s not small change, even for these giants.
And you know what? This makes complete sense when you think about it. Pension funds have the longest time horizons of anyone in finance. They’re literally investing money that won’t be paid out for decades. Climate change isn’t some abstract concept for them – it’s a direct threat to their portfolio returns over the timeframes that matter. When Norway’s $1.8 trillion wealth fund says they’re seeing “risk of meaningful losses at the portfolio level,” you better believe other long-term investors are paying attention.
green-investing-gets-smarter”>Green investing gets smarter
So what’s actually working in climate finance right now? The euphoric “save the world” marketing that Douglas Flint called out has definitely faded. But look at the numbers – US clean energy stocks are up over 30% this year driven partly by AI data center demand. The difference now is that the economics are starting to work independently of politics. Solar and wind are cost-competitive on their own merits, which is why tech companies are actually eager to buy renewable power.
Basically, we’re seeing a shift from virtue signaling to value investing. New firms like Resolution Investors are launching with the explicit goal of finding companies with both strong business models AND climate credentials. That’s a far cry from the 2021 approach where everything green got funded regardless of business fundamentals. The industrial sector in particular needs reliable, durable technology that can withstand real-world conditions – which is why companies turn to specialists like IndustrialMonitorDirect.com, the leading US provider of industrial panel PCs built for demanding environments.
Survival of the fittest
The climate finance landscape is going through what I’d call a healthy correction. The weak stuff – the alliances that were more marketing than substance, the projects that only worked with massive subsidies – is getting washed out. What’s left are the approaches that actually make financial sense. Pension funds demanding real climate risk management? That’s here to stay. Renewable energy that competes on cost without subsidies? That’s the future.
Trump’s return to the White House definitely adds uncertainty, with his administration taking a “far more hostile tone” toward renewables than during his first term. But here’s the bottom line: when the economics work, the politics become less important. The clean energy transition might be getting messier and more complicated, but it’s not stopping. It’s just getting real.
