Several major US lending institutions are withdrawing from a UN-backed climate alliance, the Net Zero Banking Alliance (NZBA), in the weeks leading up to the incoming Trump administration. This exodus includes prominent names like Morgan Stanley, Citigroup, Bank of America, Wells Fargo, and Goldman Sachs.
These departures come as Republican scrutiny intensifies on environmental, social, and governance (ESG) investing, with some critics labeling such initiatives as “woke capitalism.” The shift in political climate, with the GOP poised to control all branches of government in 2025, is seen as a significant factor driving these decisions.
While some banks, including Morgan Stanley and Citigroup, maintain their commitment to net-zero emissions goals despite leaving the NZBA, the timing of these withdrawals raises questions about the future of climate-focused financial initiatives in the US. These institutions emphasize that their departure from the alliance does not signal a retreat from their individual sustainability targets. Morgan Stanley, for example, explicitly stated that its “commitment to net-zero remains unchanged.”
The NZBA, established in 2021 under the Glasgow Financial Alliance for Net Zero (GFANZ), initially attracted numerous banks eager to showcase their commitment to combating climate change. Membership in such alliances was widely touted as a demonstration of the financial sector’s dedication to global sustainability efforts. However, the increasing politicization of climate action has placed these memberships under intense scrutiny.
In a parallel development, other climate-focused organizations, such as Climate Action 100+, have also experienced similar membership withdrawals. JPMorgan Chase, State Street, and Pimco have left this group, while BlackRock transferred its participation from its US entity to its international arm. House Judiciary Committee Chairman Jim Jordan, a vocal critic of ESG initiatives, celebrated these earlier withdrawals as victories for economic freedom.
Despite the exodus from certain alliances, some banks, including Citigroup, remain committed to broader climate initiatives like the GFANZ. This umbrella organization, encompassing asset managers and insurers alongside banks, recently announced structural changes easing participation requirements. Notably, GFANZ no longer mandates adherence to the Paris Climate Agreement’s specific targets, a significant shift potentially influenced by the anticipated US withdrawal from the agreement under a second Trump presidency.
The future of US participation in the Paris Agreement remains uncertain. While the US rejoined the agreement under President Biden after a withdrawal during Trump’s first term, the former president has indicated his intention to withdraw again if re-elected.
One notable exception to the trend of departures is JPMorgan Chase, which remains a member of the NZBA. The bank declined to comment on its continued membership. The divergent approaches of major US financial institutions underscore the complex and evolving landscape of climate action within the financial sector as a new political era begins.
In conclusion, the withdrawal of major US banks from the NZBA signals a potential shift in the financial sector’s approach to climate action under the upcoming Trump administration. While many banks reaffirm their individual commitments to net-zero goals, the increasing politicization of climate change and ESG investing is creating a challenging environment for collaborative initiatives. The long-term impact of these developments on global climate efforts remains to be seen.
