Major US Lenders Distance Themselves from UN-Backed Climate Initiative
As the new administration prepares to take office, some of the largest lenders in the US are quietly withdrawing from the Net Zero Banking Alliance (NZBA), a UN-backed climate group. The latest to exit is Morgan Stanley, which confirmed its departure on Thursday, following in the footsteps of Citigroup, Bank of America, Wells Fargo, and Goldman Sachs.
A Shift in Priorities
While some of these banks claim their commitment to net-zero goals remains unchanged, their decision to leave the NZBA has sparked speculation about the future of climate-focused investing. The NZBA was formed in 2021 as part of the Glasgow Financial Alliance for Net Zero, with many banks initially touting their membership as a key commitment to reducing greenhouse gas emissions.
Political Backlash
However, as the GOP prepares to take control of Washington, these financial environmental alliances are coming under increasing political scrutiny. The House Judiciary Committee, led by Ohio Republican Jim Jordan, has criticized such alliances, accusing them of creating a “climate cartel.” This backlash has led to a wave of withdrawals from climate-focused groups, including Climate Action 100+, which has lost members such as JPMorgan Chase, State Street, BlackRock, and Pimco.
A Changing Landscape
Despite these withdrawals, some banks are choosing to remain part of the Glasgow Financial Alliance for Net Zero, a broader climate initiative that includes coalitions of large asset managers and insurers. Citigroup, for example, remains a member of this alliance, which has recently announced changes to its participation guidelines. Under the new rules, participating firms will no longer be required to meet the goals set out in the Paris Climate Agreement.
A Divided Industry
As the US prepares for a potential withdrawal from the Paris Climate Agreement, the banking industry is becoming increasingly divided on its approach to climate-focused investing. While some banks are choosing to distance themselves from UN-backed climate initiatives, others are remaining committed to their net-zero goals. JPMorgan Chase, for example, remains a member of the Net Zero Banking Alliance, although it declined to comment on its membership.
A Shifting Political Landscape
The 2024 presidential campaign has brought climate policy back into the spotlight, with the Trump campaign promising to pull the country out of the Paris Climate Agreement once again. As the political landscape continues to shift, it remains to be seen how the banking industry will respond to the changing winds of climate policy. One thing is certain, however: the debate over climate-focused investing is far from over.
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