In a significant shift within the financial sector, some of the largest U.S. banks are withdrawing from a prominent United Nations-backed climate initiative as the political landscape braces for the return of a Trump administration.
Morgan Stanley became the latest major lender to announce its exit from the Net Zero Banking Alliance (NZBA) on Thursday, joining recent departures by Citigroup, Bank of America, Wells Fargo, and Goldman Sachs. Despite their withdrawal, these institutions maintain that their climate commitments remain intact.
“Morgan Stanley’s commitment to net-zero remains unchanged,” the bank stated in an email to Yahoo Finance. Similarly, Citigroup affirmed, “We remain committed to reaching net zero and continue to be transparent about our progress.”
Climate Goals Under Political Scrutiny
The NZBA, established in 2021 under the Glasgow Financial Alliance for Net Zero, was initially lauded as a milestone for financial institutions committing to climate goals. However, such affiliations have come under fire as the Republican Party, poised to take control of Washington, increases its criticism of so-called “woke” investing.
In December, the House Judiciary Committee, led by Ohio Republican Jim Jordan, accused financial environmental alliances of fostering what it termed a “climate cartel.” This criticism has fueled the exodus of major players from climate-focused initiatives.
The trend extends beyond the NZBA. Climate Action 100+, a coalition aimed at reducing global greenhouse gas emissions, has seen the departure of JPMorgan Chase, State Street, BlackRock, and Pimco. Similarly, the Net Zero Insurance Alliance faced significant member withdrawals in 2023.
Last year, Jordan celebrated these departures, calling them “big wins for freedom and the American economy,” and encouraged other institutions to abandon what he described as “collusive ESG actions.”
Adjustments to Climate Commitments
Despite the departures, some banks continue to participate in broader climate initiatives. Citigroup, for instance, remains a member of the Glasgow Financial Alliance for Net Zero, which encompasses the NZBA along with other coalitions of asset managers and insurers.
The alliance recently announced changes aimed at easing participation requirements, including lifting obligations tied to the Paris Climate Agreement. These adjustments, reported by Bloomberg, reflect the shifting priorities within the financial sector as political and economic pressures mount.
The U.S. previously exited the Paris Climate Agreement during Donald Trump’s presidency in 2017 and rejoined under President Biden in 2021. Trump’s 2024 presidential campaign has signaled intentions to withdraw the U.S. from the agreement once again.
JPMorgan Chase Stays the Course
Not all institutions are distancing themselves from the NZBA. JPMorgan Chase, a prominent member of the alliance, declined to comment on its continued participation.
As political and environmental priorities clash, Wall Street’s shifting stance on climate initiatives underscores the complexities financial institutions face in navigating a rapidly changing landscape.
