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

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  • Yildirim, Canan
  • Vanwalleghem, Dieter

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.

Suggested Citation

  • Yildirim, Canan & Vanwalleghem, Dieter, 2026. "The rise and demise of the Net-Zero Banking Alliance: Did the markets care?," Economics Letters, Elsevier, vol. 258(C).
    • Handle: RePEc:eee:ecolet:v:258:y:2026:i:c:s0165176525005580
    DOI: 10.1016/j.econlet.2025.112721
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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