6 of the Largest U.S. Banks Leaving Net Zero Alliance Ahead of Trump

Six of the largest banks in the United States have bowed out of the global Net Zero Banking Alliance (NZBA), with the inauguration of Donald Trump predicted to bring political backlash concerning climate action, reported The Guardian.

The latest to withdraw is JP Morgan, which followed Citigroup and Bank of America. Morgan Stanley, Goldman Sachs and Wells Fargo have also left the United Nations-sponsored NZBA since the beginning of December.

“JPMC is ending our membership in the Net Zero Banking Alliance (NZBA). We will continue to work independently to advance the interests of our Firm, our shareholders and our clients and remain focused on pragmatic solutions to help further low-carbon technologies while advancing energy security. We will also continue to support the banking and investment needs of our clients who are engaged in energy transition and in decarbonizing different sectors of the economy,” a spokesperson for JPMorganChase said in a statement provided to ESG Today.

The defections from NZBA come on the heels of exits from similar groups in the finance industry. In 2023, GOP litigation threats led to a mass exodus from an insurers’ net zero alliance, Bloomberg reported. And an asset managers climate organization disbanded from Vanguard Group — the second-largest money manager in the world — in 2022.

The breakup of worldwide climate associations has forced the regrouping of those in charge. The Glasgow Financial Alliance for Net Zero (GFANZ) serves as a finance industry net zero umbrella organization, and it ended last year with a message that it was going to distance itself from the other alliances. According to the latest update from GFANZ, it plans to make its advice available to financial firms that have made no commitment to a net zero pact, as well as those that have.

JPMorgan said on Tuesday that it plans to “continue engaging with GFANZ, among others, to advance pragmatic solutions and market conditions that can help further a low-carbon and energy-secure future,” as reported by Bloomberg.

According to analysts, the banking institutions’ withdrawals are a response to “anti-woke” sentiment from U.S. rightwing politicians, which are predicted to increase when Trump becomes president, The Guardian reported.

Trump’s campaign promises to deregulate energy, dismantle environmental rules and “drill, baby, drill” are predicted to become a governing reality in his role as commander-in-chief of the world’s biggest producer of oil and gas.

“The sudden exodus of these big U.S. banks out of the NZBA is a lily-livered effort to avoid criticism from Trump and his climate denialist cronies,” said Paddy McCully, a senior analyst at campaign group Reclaim Finance, as reported by The Guardian. “A few years ago, when climate change was at the front of the political agenda, the banks were keen to boast of their commitments to act on climate. Now that the political pendulum has swung in the other direction, suddenly acting on climate does not seem so important for the Wall Street lenders.”

NZBA — led by banks, but convened by the UN Environment Programme’s finance initiative — commits its members to aligning their investment, lending and capital market activities with the goal of net zero emissions by mid-century or earlier.

A spokesperson for Citigroup — a founding member of NZBA — said the financial institution’s decision to leave would allow it to “focus on addressing barriers to mobilising capital to emerging markets in support of the low-carbon transition. We remain committed to reaching net zero and continue to be transparent about our progress.”

Carbon Trust senior manager Toby Kwan said the NZBA departures could give banks more flexibility concerning which pathway they choose to align with and which sectors they include in their targets, as well as less strict timeframes.

A Republican-led House of Representatives judiciary committee in December accused “a cartel” of financial institutions and climate activists of conspiring to “impose radical ESG-goals” on companies in the U.S.

After the most recent withdrawals, 141 banks remain members of NZBA, including all of the largest banks in Europe.

“By strengthening their commitments, NZBA banks can demonstrate that they have not simply used U.S. obstructionism as an excuse to maintain the NZBA’s weak position,” McCully pointed out, saying those remaining would now have a chance to advance further.

Kwan added that NZBA’s loss of U.S. banks was not a death knell for the organization.

 “While these major financial institutions leaving the alliance raises a question mark on the future of climate action in the financial sector, the remaining NZBA members represent a significant portion of the global banking sector, controlling approximately 40% of global banking assets, or $64tn [£51tn],” Kwan said, as The Guardian reported. “This substantial influence cannot be understated, and NZBA members can drive the transition to a net zero economy.”