This week’s climate policy and finance developments reveal sharp shifts in direction. From banking alliances dissolving to new catastrophe bond records, the tension between financial retreat and innovation is evident. Governments cut programmes while international institutions and courts expand influence, underlining a volatile moment ahead of COP30.
Banking alliance shuts down amid member exits
The Net Zero Banking Alliance (NZBA) has announced its immediate closure following a wave of withdrawals by major banks in the U.S., Europe, and Japan. The UN-backed coalition had aimed to align $74 trillion of assets with net zero by 2050 but came under increasing criticism for weak accountability. According to The Guardian, the group will now transition into a voluntary guidance body rather than a binding alliance.
Analysts say the collapse highlights divisions in global finance over climate alignment. Critics argue that member banks were unwilling to impose strong fossil fuel restrictions, undermining credibility. Supporters of the transition say guidance can still provide benchmarks, but pressure will likely shift to national regulators.
U.K. leadership pledges to repeal Climate Change Act
Kemi Badenoch, leader of the Conservative Party, has pledged to repeal the U.K.’s Climate Change Act if her party wins power. The act, passed in 2008, set the world’s first legally binding emissions target and created the Climate Change Committee to monitor progress. According to The Guardian, Badenoch also committed to abolishing carbon budgets.
Environmental groups warn that removing the Act would dismantle the framework underpinning U.K. climate action and risk destabilising investment in renewables. Supporters claim the move would cut red tape and reduce costs, though the U.K. has already halved emissions since 1990 under the existing law.
U.S. cancels nearly $8 billion in climate funding
The Trump administration announced it will cancel nearly $8 billion in federal climate funding, cutting support for projects in 16 states. According to Reuters, programmes in California and New York were among the hardest hit.
Officials argue the cuts reflect fiscal discipline and the need to prioritise other spending. State governments and environmental groups said the decision will undermine jobs and delay projects ranging from clean power to resilience infrastructure. The move forms part of broader federal efforts to scale back environmental commitments.
Fossil fuel funding plummets under green pact
Public finance for international fossil fuel projects fell sharply in 2024, down by as much as 78% among 35 signatory countries of the Clean Energy Transition Partnership. According to Reuters, support for coal, oil, and gas projects declined by $11.3 to $16.3 billion compared with earlier levels.
While the decline shows countries moving away from fossil project finance, some—including Germany, Switzerland and the U.S.—continued approving new deals. Campaigners welcomed the overall cut but warned that exceptions risk undermining the credibility of international climate finance pledges.
Issuance of catastrophe bonds hits record high
The global insurance sector issued more than $18.1 billion in catastrophe (cat) bonds in 2025, surpassing the 2024 record. These bonds transfer natural disaster risk from insurers to capital market investors. According to the Financial Times, appetite has been driven by higher yields and portfolio diversification.
The surge demonstrates growing demand for financial instruments tied to climate-related risks. However, reinsurers warn of potential volatility as disasters become more frequent. Some analysts suggest investors may underestimate correlated risks from climate change.
Calls intensify for climate risk buffer in banking
A new report by Finance Watch urges regulators to introduce a climate risk capital buffer for banks exposed to fossil fuel assets. In 2023, global banks held more than $1.1 trillion in fossil exposures. According to Green Central Banking, current risk models fail to capture the scale of transition risk.
The group argues that without mandatory buffers, banks could underestimate losses tied to stranded assets. They propose that supervisors enforce higher capital requirements for fossil lending to better protect the financial system.
Over 3,000 climate lawsuits reshape policy norms
The UN Environment Programme (UNEP) and the Sabin Center released new data showing that more than 3,000 climate-related lawsuits have been filed globally. Cases range from greenwashing claims against corporations to actions targeting governments over inadequate emissions cuts. According to UNEP, the number of cases has tripled since 2015.
The report says litigation is now shaping policy by compelling governments to act and forcing companies to adjust disclosures. It warns that legal exposure has become a central risk for both public and private entities.
EU LIFE 2025 calls draw record demand
The European Commission reported that its LIFE 2025 funding call drew 1,095 applications requesting over €3.1 billion, a record high. The programme supports projects on climate, nature, and environment. According to CINEA, the total exceeds available budget by a wide margin.
Officials said high demand underscores the strong pipeline of projects needing finance. Funding decisions are expected later this year, with emphasis on biodiversity, circular economy, and climate adaptation initiatives.
Nordic states intensify climate finance cooperation
Governments from across the Nordic region agreed to expand joint action on climate finance during the 2025 Nordic Climate Dialogues. According to the Nordic Development Fund, the focus will be on scaling blended finance and public-private partnerships.
Leaders emphasised the importance of coordination as global climate finance faces political headwinds. Nordic institutions committed to mobilising additional resources for developing countries, while maintaining climate finance as a diplomatic priority.
U.N. Climate Summit spurs new pledges
Nearly 100 countries updated or reaffirmed their nationally determined contributions (NDCs) at the 2025 U.N. Climate Summit. According to IISD, leaders used the meeting to prepare momentum for COP30.
The summit also served as a platform for climate finance announcements. Donor countries highlighted adaptation support, while developing states demanded clearer delivery timelines. Observers said the event reflected both ambition and the persistent gap between pledges and real funding.
