Six major US banks left the net zero alliance before Trump's inauguration | Banking

The six largest banks in the United States have all left the global banking industry's net-zero target-setting group, with Donald Trump's impending inauguration as president expected to spark a political backlash against climate action.

JP Morgan is the latest to withdraw from the UN-sponsored Net Zero Banking Alliance (NZBA), following Citigroup, Bank of America, Morgan Stanley, Wells Fargo and Goldman Sachs. All six have left since the beginning of December.

Analysts said the withdrawals were an attempt to ward off anti-woke attacks from right-wing US politicians, which are expected to intensify when Trump is sworn in as the country's 47th president in just under a fortnight.

Trump's promises to deregulate the energy sector, dismantle environmental rules and drill, baby, drill, made up a large part of his campaign platform and are expected to be a key part of his plan to govern the United States, the most major global producer of oil and gas.

Paddy McCully, senior analyst at campaign group Reclaim Finance, said: “The sudden exodus of these big US banks from the NZBA is a mad effort to avoid criticism from Trump and his climate denial acolytes.

A few years ago, when climate change was at the top of the political agenda, banks readily boasted about their commitment to climate action. Now that the political pendulum has swung the other way, taking action on climate suddenly doesn't seem so important to Wall Street lenders.

Convened by the financial initiative of the United Nations Environment Program but led by banks, the NZBA commits its members to align their lending, investment and capital markets activities with net greenhouse gas emissions. zero greenhouses by 2050 or earlier.

Citigroup was a founding member of the NZBA. A bank spokesperson said Citigroup's decision to withdraw would allow it to focus on removing barriers to raising capital to emerging markets to support the transition to a low-carbon economy.

We remain committed to achieving net zero emissions and continue to be transparent about our progress, the bank said.

Regarding its withdrawal, JP Morgan said it would work independently to advance the interests of our company, its clients and its shareholders, while remaining focused on pragmatic solutions to drive the development of low-emission technologies. carbon while advancing energy security.

A Goldman Sachs spokesperson said the bank was very focused on increasingly stringent reporting standards and requirements imposed by regulators, and insisted the bank had made significant progress on targets. of net zero emissions from the company.

Wells Fargo only commented to confirm its withdrawal from the alliance, while Bank of America and Morgan Stanley did not respond to requests for comment.

Carbon Trust senior executive Toby Kwan said banks' withdrawals from the NZBA could give them more flexibility on which sectors they decided to include in their targets and which path to align with, as well as less strict deadlines for working.

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The membership of financial institutions in net zero alliances has been attacked by the country's right-wing politicians. In 2022, a potential antitrust lawsuit by Republican state attorneys general had led some U.S. banks to threaten to leave the NZBA, with withdrawals averted after the group made changes to guidelines that could be interpreted as requirements for taking action on fossil fuels. .

Then, in November, a group of states led by Texas sued BlackRock, Vanguard and State Street, all large asset management firms, for adopting pro-climate policies aimed at reducing reliance on coal that, according to the plaintiffs, had driven up energy prices.

Most recently, in December, the Republican-led Judiciary Committee of the House of Representatives, the lower house of the US Congress, accused a cartel of financial companies and climate activists of collusion to impose radical ESG targets on US companies. .

On Tuesday, after the exodus of American banks, the NZBA still had 141 banks among its members, including all the largest European banks. McCully said the departure of U.S. banks would give those remaining room to go further. He said: By strengthening their commitments, the NZBA banks can demonstrate that they have not simply used US obstructionism as an excuse to maintain the NZBA's weak position.

Kwan said the loss of the US banks was by no means the death knell for the NZBA. While the departure of these major financial institutions from the alliance raises a question mark over the future of climate action in the financial sector, the remaining NZBA members represent a significant part of the global banking industry, controlling approximately 40% of global banking assets, or $64 trillion. [51tn]she said. This substantial influence cannot be underestimated, and NZBA members can lead the transition to a net zero economy.

The NZBA had no comment.

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