The Net-Zero Banking Alliance — a group dedicated to helping lenders reduce their carbon footprints — has in quick succession been abandoned by Goldman Sachs Group Inc., Wells Fargo & Co., Citigroup Inc., Bank of America Corp. and Morgan Stanley. JPMorgan Chase & Co., the largest US bank, looks to be next in line.
The moves reflect US banks’ desire to shield themselves from increasing political pressure as Donald Trump returns to the White House, according to people familiar with the matter who asked not to be identified discussing private deliberations. And NZBA is bracing for more US exits, Secretariat Lead Sarah Kemmitt told members in a Dec. 31 letter seen by Bloomberg. She cited the “political environment.”
At the same time, the real-world impact of the NZBA defections is unclear. According to data compiled by Bloomberg, banks have collectively stepped up their financing of the fossil-fuel industry since the alliance was formed in 2021.
Membership of NZBA was likely more a case of “virtue signaling” than “meaningful climate impacts,” said Jill Fisch, a business law professor at the University of Pennsylvania.
A spokesperson for NZBA declined to comment.
Activists are now demanding that the government intervene to target Wall Street. Environmental Advocates NY, a nonprofit, says it’s urging New York state officials to introduce regulations and laws that would compel banks operating in the world’s biggest financial hub to take climate action.
The wave of NZBA exits follows behind-the-scenes tensions that have been brewing for more than two years, Bloomberg’s reporting has shown. In 2022, JPMorgan and Morgan Stanley were among banks pushing back against binding targets on climate finance. NZBA then watered down some requirements, and members stayed put. But as the Republican Party grows more hostile toward climate-friendly organizations, the finance industry is repositioning itself.
Global temperatures are rising fast, yet banks continue to reap short-term profits by sticking with fossil fuel producers. It’s therefore both “distressing and unsurprising” that Wall Street is turning it’s back on net zero alliances, said Ken Pucker, who teaches sustainability at the Fletcher School at Tufts University in Medford, Massachusetts.
The alliances were created in order to encourage the finance industry to take into account the longer-term cost of supporting oil, gas and coal.
Back in 2021, when NZBA was formed, banks now leaving the alliance proudly touted their membership. BofA Chief Executive Officer Brian Moynihan spoke of a “commitment to net zero” in his role as co-chair of the Sustainable Markets Initiative, whose stated mission is to “build a coordinated global effort” to help green the private sector.
And in an April 2021 statement announcing its agenda, the world’s biggest coalition for climate finance — the Glasgow Financial Alliance for Net Zero — said it would “require signatories to set science-aligned interim and long-term goals to reach net zero no later than 2050.”
GFANZ ended 2024 by recalibrating its mission as banks flee and GOP attacks intensify. The group is distancing itself from the net zero alliances for which it had previously been an umbrella organization. Going forward, GFANZ will make its guidance available to financial firms, whether they’ve committed to a net zero alliance or not.
A spokesperson for GFANZ declined to comment beyond the group’s public statements. Banks that sign up to NZBA still commit to transition their financed emissions to align with “pathways to net zero by 2050” at the latest, according to its website. They’re also required to provide 2030 targets to show they’re on track, and to document their progress.
All banks exiting NZBA have made public statements to say they still recognize decarbonization as a worthy goal. But they’ve also made clear that their biggest duty is to serve the needs of their clients. None has provided an official reason for quitting the alliance.
Wall Street is now navigating a world in which bankers and money managers suspected of being unsupportive of the GOP’s pro-fossil fuel agenda face a growing threat of litigation.
Just weeks after Trump was re-elected in November, Texas led a move to sue BlackRock Inc., Vanguard Group Inc. and State Street Corp. for allegedly breaching antitrust laws by adopting pro-climate strategies to suppress coal production.
Then in December, the GOP-led House Judiciary Committee said it found “substantial evidence that a climate cartel of financial institutions” had engaged in “anticompetitive collusion” by demanding that companies “disclose, reduce and enforce” their net zero climate commitments.
The committee, which is led by Ohio Republican Jim Jordan, singled out GFANZ and similar groups for leading what it described as a climate crusade.
GOP members have made clear they feel increasingly emboldened. After hearing of the defections from NZBA, Republican Congressman-elect Riley Moore of West Virginia said via a spokesperson that he will keep trying to ban and block financial firms suspected of supporting “anti-fossil fuel ESG policies.”
Meanwhile, Wall Street firms continue to earn considerably more from arranging fossil-fuel deals than their European counterparts. Last year, JPMorgan topped the league table of banks underwriting bonds and loans for oil, gas and coal companies, according to data compiled by Bloomberg. It was followed by Wells Fargo, TD Securities, BofA, RBC Capital Markets and Citigroup. The biggest underwriter of green bonds, meanwhile, was BNP Paribas SA, which is the largest bank in the European Union.
European banks, which are subject to much stricter climate regulations than their US peers, have so far showed no sign of walking away from NZBA. And representatives of lenders with headquarters spanning London to Amsterdam to Frankfurt said they plan to stay put.
“Our position is very straightforward, we have absolutely no intention of leaving the NZBA,” a spokesperson for Standard Chartered Plc told Bloomberg. ING Groep NV and Deutsche Bank AG have made similar statements.
Global banks provided about $680 billion worth of fossil-fuel loans and bond deals in 2024, according to data compiled by Bloomberg. That’s up from $667 billion in 2021, when NZBA was created. Banks that have stepped up such deals over the period include BofA and Goldman, the data show.
Pucker of Tufts University draws parallels between the choices banks are making today, and those they made in the lead-up to the 2008 financial crisis. He says to understand banks’ thinking now, it’s worth recalling a 2007 comment by Charles O. Prince III, who was Citigroup’s CEO at the time: “‘As long as the music is playing, you’ve got to get up and dance’.”
Global warming is now on track to race past the critical threshold of 1.5C, raising questions as to the value of having financial firms claim they can still align their operations with that target.
“Banks merely reflect the real economy,” said Aniket Shah, head of sustainability and transition strategy at Jefferies Financial Group Inc. “So if the real economy remains a hydrocarbon economy, then banks will reflect that too.”
Environmental Advocates NY says the state government must now consider forcing banks to impose financing limits to align with climate goals, including restrictions targeting fossil fuels. They also are calling for rules that would require banks to document the extent to which they’re lowering their so-called financed emissions.
Vanessa Fajans-Turner, executive director at the nonprofit, said it’s clear Republicans have succeeded in their efforts to get Wall Street to retreat from climate commitments, “modest” as they were.
“The banks won’t police themselves,” she said. “That’s why we need regulation.”
(GFANZ is co-chaired by Mark Carney, who is chair of Bloomberg Inc. and a former Bank of England governor, and Michael R. Bloomberg, the founder of Bloomberg News parent Bloomberg LP.)
--With assistance from Alastair Marsh, Gautam Naik and Todd Gillespie.
(Updates with comment from Jefferies in fourth-last paragraph.)
