By Simon Jessop, Iain Withers and Saeed Azhar
LONDON/NEW YORK (Reuters) – U.S. lenders have been rushing in recent weeks to leave one of the world’s top banking sector climate coalitions, drawing scorn from campaigners who worry the industry is losing resolve to take action on fossil fuels.
Goldman Sachs broke ranks to announce on Dec. 6 it was leaving the Net-Zero Banking Alliance (NZBA) and was soon followed by Wells Fargo, Citi, Bank of America and Morgan Stanley. The exit of some of the world’s biggest lenders means the NZBA, whose members aim to align their financing with the global climate fight, now includes just JPMorgan among the Big Six U.S. banks.
The exodus ended unhappy marriages for most after Republican politicians warned that membership in the group, particularly if it led to reduced financing for fossil fuel companies, could breach antitrust rules.
Banks that have pulled out may now reduce their commitments to climate-friendly policies, said Patrick McCully, senior analyst for energy transition at Reclaim Finance.
“The key thing to watch will be weakening of their existing targets and policies,” said McCully, noting some banks had ambitious targets for decreasing emissions. Still, he did not expect banks to announce publicly any such changes.
While the NZBA had sought at various times to tailor its rules to keep the large and systemically important banks onboard, most recently last year, the efforts were ultimately not enough.
Jeanne Martin, head of banking programme at advocacy group ShareAction, said those leaving were sending a signal to the market that climate change has become even less of a priority for them.
“This is concerning when they are among the world’s largest providers of financing to fossil fuels,” she said.
A spokesperson for JPMorgan, the last remaining major U.S. bank in the alliance, said it regularly evaluates its memberships of such groups, without commenting on whether it plans to join the exodus. The other U.S. members are smaller: Amalgamated Bank, Areti Bank and Climate First Bank.
While none cited it as a factor, hanging over the exits was a two-year-long U.S. backlash against environment, social and governance investing. A group of Republican politicians, many of them state attorneys general, have accused members of potential breaches of antitrust rules.
Such pressure stepped up after a Republican clean sweep in November’s U.S. elections heralded the return of Donald Trump as president, with investors including BlackRock recently facing legal challenges over their climate efforts.