The six largest US banks have withdrawn from the global banking industry’s net-zero target-setting group, with Donald Trump’s upcoming presidency likely to spark a political backlash against climate action.
Jp Morgan is the second individual to leave the net-zero banking alliance NZBA, after Citigroup, Bank of America, Morgan Stanley, Wells Fargo and Goldman Sachs. All six have been absent since early December.
Analysts have claimed the withdrawals are an effort to prevent right-wing politicians from launching “anti-woke” attacks that are expected to escalate when Trump is officially re-elected in less than two weeks.
Trump’s campaign promises to reform the energy sector, dismantle environmental regulations and “drill, baby, drill” are likely to be central to his strategy for governing the US, the world’s largest oil and gas producer. Paddy McCully, a senior analyst at campaign group Reclaim Finance, believes the exodus of major US banks from the NZBA is a calculated move to deflect criticism of Trump and his climate-denying cronies.
The swing of the political pendulum in the opposite direction has made it seem unlikely that Wall Street lenders will take climate action.
The NZBA, which was launched as part of the UNEP Finance Initiative in support of the UN Environment Programme, recruits members to achieve net-zero greenhouse gas emissions by 2050 or sooner, aligning its lending, investment and capital markets activities with these goals.
One of the founding members of the NZBA was Citigroup. The bank’s representative said the decision to step down would allow the rescue firm to focus on solving the challenges of attracting capital to emerging markets to help in the transition to a low-carbon economy.
JP Morgan announced its decision to withdraw from the conference, stating that it would work independently to advance the interests of the company, its clients and shareholders, while focusing on practical solutions that would help advance low-carbon technologies and energy security.
The bank’s spokesperson claimed that they were “very demanding” regarding the stricter standards and reporting mandates imposed by regulators, and maintained that the bank had made significant progress on the company’s net-zero carbon targets.
Wells Fargo’s statement was intended only to confirm its exit from the alliance, while Bank of America and Morgan Stanley did not respond to requests for comment.
Carbon Trust senior manager Toby Kwan suggested that the banks’ withdrawals from NZBA could provide them with greater control over the targets they set and the path they follow, as well as less stringent deadlines.
The country’s right-wing political establishment has condemned the participation of financial institutions in net-zero emissions alliances. Some US banks threatened to leave the NZBA in 2022 due to a potential antitrust lawsuit led by red-state attorneys general. The group’s changes to guidelines succeeded in preventing the withdrawals. Regarding fossil fuels.
In November, a coalition of states, led by Texas, filed a lawsuit against major asset management firms including Blackrock, Vanguard and State Street, alleging that their pro-climate policies to reduce dependence on coal had caused energy prices to rise
In December, the US House of Representatives’ Judiciary Committee, led by the Republican-led House of Representatives, accused a cartel of financial firms and climate activists of colluding to impose extreme policies on US companies
The NZBA had 141 banks as of Tuesday, including all the major European banks, despite the departure of US banks McCully said the departure of US banks would give those left a chance to get ahead He said that by strengthening their commitments, NZBA banks can show that they have not simply used obstructionism to maintain the NZBA’s weak position
Kwan said the loss of US banks by the NZBA was not a death sentence The departure of major financial institutions from the Alliance raises questions about future of climate action in financial sector The remaining NZBA members control about 40 trillion of the world’s 64 trillion in banking assets and can drive the transition to a zero-emissions economy
