In this week’s edition of Economy and Society:
- Net Zero Banking Alliance to suspend operations
- China sends mixed climate messages
- Federal judge halts Texas law focused on proxy advisors
- Texas-led lawsuit could affect capital markets
- Globally, ESG bonds are at their lowest level since 2020
Around the world
Net Zero Banking Alliance to suspend operations
What’s the story?
On Aug. 27, the Net Zero Banking Alliance (NZBA) announced that it is suspending operations, as a number of large banks have exited the group over the last several months.
Why does it matter?
NZBA has said its remaining members will vote to determine whether it should remain a member-based group or transition to an organization that provides guidance to the banking industry on decarbonization. According to the CBC, “The NZBA did not provide any other details on what that framework would look like. A spokesperson for the alliance said those details are still being worked out.”
What’s the background?
The NZBA is a United Nations environment program that describes itself as “global member-led initiative supporting banks to lead on climate mitigation in line with the goals of the Paris Agreement.”
The six largest U.S. banks and four of Canada’s largest banks all left NZBA in January 2025. Two of Britain’s three biggest banks followed, leaving NZBA on July 11 and Aug. 1, respectively. UBS, Switzerland’s biggest bank, left NZBA on Aug. 7.
In our Aug. 20 edition of Economy and Society, we covered reports that more European banks were considering leaving the NZBA. Click here for more.
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According to the Wall Street Journal:
The Net-Zero Banking Alliance said Wednesday that it was pausing operations and initiating a vote to decide on whether to continue working as a membership-based alliance or operate as a framework initiative.
The outcome of the vote will be shared at the end of September this year, it said. “Recognizing there is major opportunity for banks and key stakeholders to build on the Alliance’s outputs and to accelerate action on key priorities, NZBA encourages the banking sector to remain steadfast in implementing their net-zero commitments,” the alliance said.
The move by the NZBA to suspend activities comes after numerous banks from the U.S. and Europe left the alliance. Those banks said that being part of such an organization was no longer necessary and that their business practices now incorporated the ESG principles learned over the past five years.
China sends mixed climate messages
What’s the story?
Last week, the Centre for Research in Energy and Clean Air released a report stating that the People’s Republic of China burned more coal and commissioned more gigawatts of new coal production in the first half of 2025 than any six-month period since 2016.
The report described a tension in Chinese power generation: “coal’s share in power generation has fallen to record lows, yet new coal power capacity additions are on track to reach decade highs. Clean energy is growing at an unprecedented speed and is now capable of meeting nearly all incremental demand, but coal power continues to expand in absolute capacity terms and remains structurally protected.”
Why does it matter?
Chinese leader Xi Jinping has said that he intends for China to hit peak carbon usage in 2030 and to be carbon neutral by 2060. As a result, Hong Kong has become one of the world’s leaders in issuing ESG bonds and creating ESG funds. The South China Morning Post reports that Hong Kong issued nearly half of all green bonds issued in Asia in 2024.
What’s the background?
The Centre for Research in Energy and Clean Air is based in Finland that describes itself as an “independent research organisation focused on revealing the trends, causes, and health impacts, as well as the solutions to air pollution.”
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According to the South China Morning Post:
Green bond issuance in Hong Kong last year reached US$43 billion, representing 45 per cent of the region’s total and keeping the city atop the league table in Asia for the seventh consecutive year, said Christopher Hui Ching-yu, secretary for financial services and the treasury, in a meeting with lawmakers on Monday.
The total of green bonds plus green loans issued in Hong Kong reached US$84 billion last year, a 50 per cent increase from 2021, he added…
“Mainland China’s goal to promote sustainable development and cut down carbon emissions has provided a lot of opportunities for the city to act as a green financing hub,” Hui said.
In the states
Federal judge halts Texas law focused on proxy advisors
What’s the story?
On Aug. 29, 2025, U.S. District Judge for the Western District of Texas Alan Albright issued a preliminary injunction blocking enforcement of Texas SB 2337, which requires proxy advisory services to disclose the use of non-financial information in making proxy-voting recommendations. The law was set to go into effect on Sept. 1. Albright set a trial date of Feb. 2, 2026.
Glass Lewis and Institutional Shareholder Services (ISS), filed multiple, overlapping claims against Texas Attorney General Ken Paxton (R) on July 24. The two advisory groups alleged the law violates their First and Fourteenth Amendment rights, is constitutionally vague, and violates the Dormant Commerce Clause.
Why does it matter?
Judge Albright ruled that the law would violate the companies’ First Amendment rights and would force them to make statements and recommendations they do not believe.
What’s the background?
The Texas Senate and House both passed SB 2337 on May 31, and Gov. Greg Abbott (R) signed it into law on June 20, 2025. It passed the state House 82-41 and the Senate 21-10. All three bill sponsors are Republicans.
President Donald Trump (R) appointed Albright to the court and the U.S. Senate confirmed his nomination in 2018.
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According to Bloomberg Law:
“I don’t understand the purpose of the statute,” Albright said during a hearing in Waco. “I understand the motivation of it. Who are you protecting?”
Albright, an appointee of President Donald Trump, said the statute wrongly compels speech by forcing the advisory firms to issue disclosures “they don’t think are accurate.”…
Opposition [to the law] formed an alliance between Glass Lewis and ISS, the biggest providers of recommendations to pension funds and other large investors at companies’ annual meetings. The firms long have feuded with Republicans and business groups that say they instill their ideological views to sway votes on ESG proposals.
Texas-led lawsuit could affect capital markets
What’s the story?
Researchers at Columbia University published a new study examining the implications of Texas v. BlackRock, finding that “While the Texas case is factually and legally flawed, it has potentially significant ramifications for investors, financial institutions, sustainability efforts, and the field of antitrust.”
Why does it matter?
The researchers—Denise Hearn and Cynthia Hanawalt— write that the case is the first legal test for the common ownership theory, which “posits that large, indexed asset managers may inherently violate antitrust laws due to their creation of anticompetitive incentives across industries.”
What’s the background?
Click here for more on the origins of the lawsuit.
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According to Institutional Investor magazine:
Entitled “Texas v. BlackRock Puts the Common Ownership Theory on Trial, with Implications across the Financial Sector and Collaborative Sustainability Efforts,” the paper by Denise Hearn and Cynthia Hanawalt of Columbia University argues that the case brings the concept of common ownership before a judge for the first time. The long-running debate about common ownership asks whether large investors that own shares in several firms within one industry are incentivized to soften competition with throttling tactics such as price manipulation, stifling innovation, or limiting new entrants….
Hearn and Hanawalt believe that the case is “factually and legally flawed,” but in the paper argue that even a loss for Texas could result in a sea change for the asset management industry that leads to changes in conduct….
The case utilizes progressive scholarship that for ten years has been making the argument that index funds are anti-competitive and violate antitrust rules, [Hearn] said. “But it uses those arguments in a surprising way, by claiming that the undue influence of the managers was driving the coal companies to restrict outputs and therefore raise prices for consumers.”
North Carolina places vetoed bill on legislative calendar
One state took action on ESG legislation last week. On Aug. 26, the North Carolina House of Representatives placed H171 on the legislative calendar. Gov. Josh Stein (D) vetoed the Republican-sponsored bill on July 3. Click here to dive into Ballotpedia’s ESG legislation tracker.
On Wall Street and in the private sector
Globally, ESG bonds are at their lowest level since 2020
What’s the story?
New data from Bloomberg show that ESG/sustainability bonds constitute the lowest level of global corporate debt since 2020, comprising just 5.7% of all global corporate debt that non-financial companies issued. issued by non-financial companies.
Why does it matter?
Bloomberg says that the slowdown in green bond issuance is “another signal of the [ESG] market’s slowdown in 2025” and is, in part, a response to political pushback against ESG.
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According to Bloomberg:
Green, social, sustainability and sustainability-linked bonds comprise just 5.7% of the total sold by non-financial companies around the globe this year, the lowest such figure since 2020, Bloomberg-compiled data show.
They accounted for 6.8% through this time last year and as much as 8.2% in 2022.
Companies have shied away from the debt as its pricing benefits have eroded. In July, spreads on global green bonds traded wider than conventional bonds, meaning that on average, they didn’t offer any discount for borrowers, according to Bloomberg Intelligence.