Citigroup and Bank of America announced their withdrawal from the Net-Zero Banking Alliance (NZBA) on Tuesday. This follows similar decisions by Wells Fargo and Goldman Sachs earlier this month, signaling a shift in the financial sector’s approach to climate change commitments. The NZBA is a global collective of banks committed to reducing greenhouse gas emissions from their lending and investment portfolios to net-zero by 2050.
Financial institutions have faced increasing pressure to address their role in financing fossil fuel activities and incorporate net-zero standards into their operations. However, recent political pressures from Republican policymakers opposed to limiting fossil fuel financing have led some banks to reconsider their involvement in climate initiatives.
Citigroup stated that its decision to leave the NZBA was based on progress made towards its own independently established net-zero goals. Bank of America, in a statement to Reuters, affirmed its commitment to continue working with clients to meet their needs regarding emissions reductions.
The departures come amidst growing legal challenges to climate-related initiatives in the financial sector. Last month, BlackRock, Vanguard, and State Street faced lawsuits from Texas and other Republican-led states alleging antitrust violations through climate activism that purportedly reduced coal production and increased energy prices. These legal actions further complicate the landscape for financial institutions seeking to balance climate commitments with political and economic realities.
While the exit of several major US banks from the NZBA raises questions about the future of collaborative climate action within the financial industry, individual banks maintain they remain committed to pursuing their own sustainability targets. The evolving regulatory and political environment will likely continue to shape how financial institutions navigate the complex challenges of climate change and the energy transition.
