In a move that has drawn criticism from environmental campaigners, several leading U.S. banks have exited the Net-Zero Banking Alliance (NZBA) in recent weeks, raising concerns over the banking sector’s commitment to addressing climate change.
Goldman Sachs led the charge on December 6, announcing its departure from the NZBA, followed closely by Wells Fargo, Citi, Bank of America, and Morgan Stanley. With JPMorgan now the sole member of the Big Six U.S. banks remaining in the coalition, the NZBA faces uncertainty over its capacity to enforce meaningful climate-aligned financial practices.
The NZBA, a coalition established under the umbrella of the United Nations, aims to align financial institutions’ lending and investment portfolios with global net-zero emissions goals. However, Republican political pressure in the U.S., warning banks against reducing financing for fossil fuel companies under the threat of antitrust violations, has undermined the group’s cohesion.
Climate ambitions at risk
Advocates fear the withdrawals could weaken banks’ existing climate commitments. Patrick McCully, senior energy transition analyst at Reclaim Finance, warned of potential dilution of emissions reduction targets. “While changes may not be publicly announced, the banks’ long-term commitments are at risk,” McCully noted.
Jeanne Martin, head of the banking programme at advocacy group ShareAction, expressed concern that the exits signal a declining prioritisation of climate change among some of the world’s most influential lenders. “These banks are significant financiers of fossil fuels, and their withdrawal sends a troubling message to the market,” she said.
JPMorgan, now the only major U.S. bank still part of the NZBA, has declined to confirm whether it plans to remain in the group. Among the other U.S. members, only smaller institutions like Amalgamated Bank, Areti Bank, and Climate First Bank remain.
Political pressure mounts
The departures occur against the backdrop of a broader U.S. backlash against environmental, social, and governance (ESG) investing. Republican attorneys general and lawmakers have intensified scrutiny of institutions aligning with climate coalitions, citing antitrust concerns.
This scrutiny gained momentum following Republican victories in the November midterm elections and the potential return of Donald Trump to the presidency. Financial giant BlackRock has faced legal challenges for its climate-related initiatives, exemplifying the heightened risks banks perceive.
Though none of the banks explicitly attributed their departures to these pressures, their actions align with the shifting political landscape. Instead, the banks reiterated their commitment to supporting clients in transitioning to a low-carbon economy.
Fossil fuels vs. green energy
Analysis by the Anthropocene Fixed Income Institute (AFII) highlights the financial incentives influencing banks’ decisions. According to its December report, U.S. banks that left the NZBA earned more from fossil fuel financing than from green energy. AFII Chief Executive Ulf Erlandsson remarked that such earnings make it easy for these banks to claim continuity in their business strategies despite leaving the NZBA.
A 2024 study, Banking on Climate Chaos, ranked all six major U.S. banks among the top 20 global lenders to fossil fuel companies, further emphasising their entrenched roles in high-emission industries.
Opportunities for Europe
The U.S. exodus has created an opportunity for European banks within the NZBA to adopt more ambitious climate policies. Patrick McCully suggested that U.S. banks had previously acted as a barrier to stricter guidelines. “It’s time for European banks to step up and show leadership in setting higher standards,” he said.
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Currently, the NZBA retains 142 members from 44 countries, representing $64 trillion in assets. European banks, including HSBC, Barclays, and BNP Paribas, now account for the largest share of coalition assets.
Advocates call for resilience
Despite the setbacks, advocates remain optimistic. Mindy Lubber, CEO of the non-profit Ceres, highlighted the strong climate commitments already made by large U.S. banks. “Ceres will continue to support banks in achieving their targets and implementing transition plans,” Lubber said, adding that banks remain critical to the global goal of net-zero emissions.
The NZBA did not immediately respond to requests for comment. However, the coalition’s future direction will likely depend on the willingness of its remaining members, particularly in Europe, to take the lead in advancing robust climate finance standards.
The departures by U.S. banks underscore the challenges of maintaining unity in global climate coalitions amid political and economic pressures, leaving advocates to urge stronger commitments from the remaining members.
