A leading business academic says a wave of companies may leave their banks if financial institutions fail to live up to sustainability aims.

Ioannis Ioannou, a professor at London Business School, issued the warning after some companies said they would end their association with HSBC after the bank ended its membership of the Net-Zero Banking Alliance (NZBA).

Speaking to Bloomberg, Ioannou said: “It demonstrates that corporate clients are willing to ‘vote with their feet’ when their bank’s commitments misalign with their values.”

He added: “Ultimately, this could trigger cascade effects, prompting other corporates to reconsider their banking relationships, regardless of their particular motivations.”

Bloomberg reported that three companies—Ecotricity, Empire Engineering and TerraLigo—announced they are moving their business away from HSBC.

Power cut

Dale Vince, founder and chief executive of Ecotricity, posted on LinkedIn: “HSBC have left the net zero alliance—pleased to say we just left them and took our £600m green economy turnover elsewhere.

“All companies that believe in net zero—aka the green economy—should ditch HSBC.”

In response, Karl Davis, managing director of Empire Engineering, offshore wind specialists, posted: “We will be following suit and taking our business from HSBC also.”

HSBC became the first UK bank to leave the alliance at the beginning of July. In a statement, the bank said it remained “resolute” in supporting the climate transition objectives of clients.

“Financed emissions targets are one mechanism that we use to track and disclose our progress towards implementing our Net Zero Transition Plan. The Net-Zero Banking Alliance played a role in developing guiding frameworks to help banks establish their initial target-setting approach.

“With this foundation in place, and as we work towards updating and implementing our Net Zero Transition Plan later in 2025, we, like many of our global peers, have decided to withdraw from the NZBA.”

Emissions mission

The NZBA is a UN-sponsored body working to support banks with a primary focus on setting science-based targets that align with 2015 Paris Climate Accord. Targets should include scope 1, 2 and 3 emissions.

Since December last year, six major US banks—JP Morgan, Citigroup, Bank of America, Morgan Stanley, Wells Fargo and Goldman Sachs—also quit the NZBA.

HSBC’s withdrawal demonstrates the risk inherent in climate and sustainability decisions at a time when the issues have become contentious, thanks to the US government’s policy approach.

In recent weeks, the UK has seen efforts to add the “environment” and “workers” to the explicit list of directors’ duties codified in section 172 of the Companies Act.

Lib Dem MP Martin Wrigley, who is sponsoring a private member’s bill to initiate the reforms, said in the House of Commons: “This bill would drastically shake up how companies operate, ensuring all company directors are required to consider the planet, their employees and the communities they serve, alongside profit.”

Ministers have so far declined to support the bill.