Analysis: Exodus by Wall Street banks from climate group worries advocates

Amalgamated Financial

06/01/2025 05:00

* 
      Follows months of pressure from Republican politicians
    

        * 
      Move leaves Net-Zero Banking Alliance overweight Europe
    

        * 
      A signal that climate is "less of a priority" -
ShareAction
    

  
    By Simon Jessop, Iain Withers and Saeed Azhar
       LONDON/NEW YORK, Jan 6 (Reuters) - U.S. lenders have
been rushing in recent weeks to leave one of the world's top
banking sector climate coalitions, drawing scorn from
campaigners who worry the industry is losing resolve to take
action on fossil fuels.
    Goldman Sachs  GS.N  broke ranks to announce on Dec. 6 it
was leaving the Net-Zero Banking Alliance (NZBA) and was soon
followed by Wells Fargo  WFC.N , Citi  C.N , Bank of America
 BAC.N  and Morgan Stanley  MS.N . The exit of some of the
world's biggest lenders means the NZBA, whose members aim to
align their financing with the global climate fight, now
includes just JPMorgan  JPM.N  among the Big Six U.S. banks.
        The exodus ended unhappy marriages for most after
Republican politicians warned that membership in the group,
particularly if it led to reduced financing for fossil fuel
companies, could breach antitrust rules.
    Banks that have pulled out may now reduce their commitments
to climate-friendly policies, said Patrick McCully, senior
analyst for energy transition at Reclaim Finance.
        "The key thing to watch will be weakening of their
existing targets and policies," said McCully, noting some banks
had ambitious targets for decreasing emissions. Still, he did
not expect banks to announce publicly any such changes.
  
        While the NZBA had sought at various times to tailor its
rules to keep the large and systemically important banks
onboard, most recently last year, the efforts were ultimately
not enough.
    Jeanne Martin, head of banking programme at advocacy group
ShareAction, said those leaving were sending a signal to the
market that climate change has become even less of a priority
for them.
    "This is concerning when they are among the world's largest
providers of financing to fossil fuels," she said.
        A spokesperson for JPMorgan, the last remaining major
U.S. bank in the alliance, said it regularly evaluates its
memberships of such groups, without commenting on whether it
plans to join the exodus. The other U.S. members are smaller:
Amalgamated Bank, Areti Bank and Climate First Bank.
    While none cited it as a factor, hanging over the exits was
a two-year-long U.S. backlash against environment, social and
governance investing. A group of Republican politicians, many of
them state attorneys general, have accused members of potential
breaches of antitrust rules.
    Such pressure stepped up after a Republican clean sweep in
November's U.S. elections heralded the return of Donald Trump as
president, with investors including BlackRock  BLK.N  recently
facing legal challenges over their climate efforts.
    For their part, the banks largely avoided giving a direct
reason for needing to leave the NZBA, instead saying they
remained committed to helping clients transition to a low-carbon
economy and disclosing their actions.
        
    Analysis of December syndication fee income from loan and
bond issuance by financial think tank the Anthropocene Fixed
Income Institute showed each of the U.S. leavers earned more
from fossil fuel than green energy.
    "As a first cut, some of these banks ... can pretty easily
say 'nothing has changed' as they are still in a
make-more-money-from-fossil-fuel mode," said AFII Chief
Executive Ulf Erlandsson.
    A study entitled 'Banking on Climate Chaos' from 2024
suggested the six biggest U.S. banks were all among the top-20
global lenders to fossil fuel companies.
        Despite the exits, the largest U.S. banks had all made
"strong climate commitments" through the NZBA and investors
would continue to push for more information about their efforts,
said Mindy Lubber, chief executive of non-profit Ceres.
  
        "Ceres will continue supporting banks as they set and
achieve targets and implement transition plans. Banks are key to
supporting the global goal of net zero emissions and to the
economic opportunities that are arising from the transition."
  
        Following the mass exit by U.S. lenders, the NZBA still
has 142 members from 44 countries with $64 trillion in assets,
with 80 European banks accounting for the largest share of the
dollar figure. Banks remaining in the coalition include HSBC
 HSBA.L , Barclays  BARC.L  and BNP Paribas  BNPP.PA .
    A spokesperson for the NZBA was not immediately available
for comment.
    Given previous tussles over where to set the bar for NZBA
membership, the exit of the U.S. banks offered an opportunity
for those who want to be more ambitious, McCully said.
    "European banks have complained that they'd love the NZBA
guidelines to be stronger but the U.S. members just won't let it
happen - so (it is) now time for the Europeans to step up and
show that they weren't just using U.S. obstructionism as an
excuse for foot-dragging," he said on LinkedIn.

 (Additional reporting by Lananh Nguyen and Tatiana Bautzer in
New York; editing by Megan Davies and Richard Chang)
 ((mailto:simon.jessop@thomsonreuters.com; +44 (0) 207 542 5052;
Reuters Messaging: Reuters Messaging:
simon.jessop.thomsonreuters.com@reuters.net))