By Simon Jessop, Iain Withers and Saeed Azhar
LONDON/NEW YORK (Reuters) – U.S. lenders have rushed to quit one of the world’s top banking sector climate coalitions in recent weeks, drawing scorn from campaigners who worry the sector is losing the resolve to take action action against fossil fuels.
Goldman Sachs broke through and announced on December 6 that it was leaving the Net-Zero Banking Alliance (NZBA) and was quickly followed by Wells Fargo, Citi, Bank of America and Morgan Stanley. The departure of some of the world’s largest lenders means the NZBA, whose members aim to align their financing with the global climate fight, now ranks only JPMorgan among the Big Six US banks.
The exodus ended unhappy marriages for most after Republican politicians warned that joining the group, especially if it led to reduced funding for fossil fuel companies, could run afoul of antitrust rules.
Banks that have pulled back can now reduce their commitments to climate-friendly policies, said Patrick McCully, senior energy transition analyst at Reclaim Finance.
“The most important thing to watch is the weakening of their existing targets and policies,” McCully said, noting that some banks had ambitious targets to reduce emissions. Still, he did not expect banks to publicly announce such changes.
Although the NZBA had tried at various times to adjust its rules to keep the large and systemically important banks on board, most recently last year, the efforts were ultimately not enough.
Jeanne Martin, head of the banking program at advocacy group ShareAction, said those who left were sending a signal to the market that climate change has become even less of a priority for them.
“This is concerning because they are among the largest providers of fossil fuel financing in the world,” she said.
A spokesman for JPMorgan, the last remaining major U.S. bank in the alliance, said it regularly reviews its membership in such groups, without commenting on whether it plans to join the exodus. The other American members are smaller: Amalgamated Bank, Areti Bank and Climate First Bank.
Although no one mentioned this as a factor, the wait for the exit was a two-year US response against environmental, social and governance investments. A group of Republican politicians, including many attorneys general, have accused members of possible antitrust violations.
This pressure increased after a Republican clean sweep of the US elections in November heralded the return of Donald Trump as president, with investors including BlackRock recently facing legal challenges over their climate efforts.
