The rise and demise of the Net-Zero Banking Alliance: Did the markets care?

Canan Yildirim () and Dieter Vanwalleghem
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Canan Yildirim: Rennes SB - Rennes School of Business
Dieter Vanwalleghem: Rennes SB - Rennes School of Business

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Abstract: This paper examines financial market reactions to the rise and collapse of the Net-Zero Banking Alliance, a major voluntary climate initiative launched in April 2021. Using an event study, we find that only founding members experienced significant negative stock price reactions, with average declines of 2% upon joining, suggesting investors viewed the commitments as credible but costly. Later signings and exits had no significant effect, reflecting declining credibility as the alliance weakened its governance amid political pressure and member departures. These findings underscore the role of institutional context and internal governance in shaping market responses to voluntary environmental commitments in banking. 1 We are grateful to NZBA for providing us with the full dates of signings, and Jojo Jacob, Anke Piepenbrink, and other seminar participants for their helpful comments during the Center for Unframed Thinking seminar, Spotlight on Green Transition (June 2025).

Keywords: Event study; Voluntary environmental alliances; Financial institutions; Climate change; Environmental strategy (search for similar items in EconPapers)
Date: 2026-01
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Published in Economics Letters, 2026, 258, pp.112721. ⟨10.1016/j.econlet.2025.112721⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05381657

DOI: 10.1016/j.econlet.2025.112721

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