The six largest banks in the US have exited the UN-backed Net Zero Banking Alliance (NZBA) following years of speculation about their departure. Climate groups suggest the timing of their withdrawal may be tied to the impending inauguration of Donald Trump.
This week, JP Morgan became the last major bank in the US to withdraw from the alliance, which was launched in the lead up to Cop26 four year ago and aims to bring together banks committed to “aligning their lending, investment, and capital markets activities with net-zero greenhouse gas emissions by 2050”, according to the NZBA website.
JP Morgan’s exit followed Morgan Stanley’s departure on January 2. Bank of America, Citigroup, Wells Fargo and Goldman Sachs announced their withdrawal in December.
Only three US banks now remain in the NZBA: Amalgamated Bank, Areti Bank and Climate First Bank, none of which hold the same global influence as their larger counterparts.
Campaign groups have questioned the efficacy of the NZBA since its inception, noting its heavy skew towards Europe – where over half of its members are based – and the lack of interest from banks in Asia Pacific. They have also criticised its “outdated” 2050 net-zero target.
Further doubts were raised in 2022, when Bloomberg reported that several major US banks – including JP Morgan and Bank of America – were threatening to leave the alliance over more stringent net-zero target enforcement efforts. NZBA later clarified that no additional requirements would be imposed on members.
The banks have not provided official reasons for exiting the alliance, though Citi tells GTR it intends to instead focus its attention on NZBA’s partner organisation, the Glasgow Financial Alliance for Net Zero (GFANZ).
Wells Fargo responded to GTR to confirm its exit from the alliance. Bank of America, JP Morgan, Morgan Stanley and Goldman Sachs did not respond to requests for comment.
The six financial institutions maintain in public statements that the decision to leave NZBA does not affect their individual climate commitments. All of the banks remain committed to reaching net zero by 2050 at the latest, with targets for financed and internal emissions reductions by 2030.
Republican resistance
Rising anti-ESG sentiment among Republicans in the US may have played a part in the decision to withdraw from the NZBA, says climate activist group Reclaim Finance.
In a January 7 statement, the group says the US financial institutions abandoned “their climate commitments apparently in fear of criticism from the incoming Trump administration”.
The statement goes on to say that “while none of the banks have given clear reasons for the exodus, US financial institutions have faced threats from right-wing politicians and pundits over the past couple of years for their membership of net zero alliances”.
Four of the banks that left were facing reviews by Texas attorney general Ken Paxton over an alleged “boycott of the oil and gas industries”, illegal under Texas Senate Bill 13. His office issued a statement hours after JP Morgan’s departure from NZBA that the reviews of all four banks would be closed.
Trump’s return to the White House on January 20 is set to slow a push towards net zero greenhouse gas emissions in the US. The president-elect has promised to reverse Joe Biden’s late-term offshore oil and gas drilling ban immediately after taking office and remove the US from the Paris Agreement – the main international treaty on climate change.
GFANZ has also restructured in recent weeks. In statements released on December 31 and January 2 the organisation said it is transitioning to an “independent Principals Group, led by CEOs and leaders from financial institutions”.
A GFANZ spokesperson tells GTR this removes the requirement for participants in GFANZ activities to be members of its eight sector alliances, including NZBA and the Net Zero Export Credit Alliance.
The alliances cover major financial sectors including banking, asset management and venture capital, all of which have their own membership criteria, generally including alignment with Paris Agreement goals.
GFANZ says the move will allow “any financial institution working to mobilise capital and lower the barriers to financing energy transition to participate”.
It has the added benefit of enabling the banks that have left NZBA to potentially remain engaged, should they choose. This is particularly relevant for Bank of America and Citi, as their CEOs are members of GFANZ’s strategy setting principals group.
Another major blow to net zero was dealt in late 2024 when OECD Arrangement members were unable to reach an agreement to ban export credit agencies from financing fossil fuel-related deals. Campaigners believe that the incoming Trump presidency makes any future deal highly unlikely.
