Wall Street Top Banks Ditch Climate Alliance Amid Political Pressure

Within the span of a month, Wall Street's biggest banks have quit what had been one of the most popular clubs inside global finance.

The Net-Zero Banking Alliance (NZBA), a group dedicated to helping lenders reduce their carbon footprint, has in quick succession been abandoned by Goldman Sachs, Wells Fargo, Citigroup, Bank of America (BofA), and Morgan Stanley. JPMorgan Chase, the largest US bank, looks to be next.

The moves reflect US banks' desire to shield themselves from increasing political pressure as Donald Trump returns to the White House, according to people familiar with the matter who asked not to be identified discussing private deliberations.

And NZBA is bracing itself for more US exits, secretariat lead Sarah Kemmitt told members in a Dec 31 letter seen by Bloomberg. She cited the "political environment." At the same time, the real-world impact of the NZBA defections is unclear.

According to data compiled by Bloomberg, banks have collectively stepped up their financing of the fossil fuel industry since the alliance was formed in 2021.

Membership of NZBA was likely more a case of "virtue signaling" than "meaningful climate impacts," said business law professor Jill Fisch from the University of Pennsylvania.

A spokesperson for NZBA declined to comment.

Activists are now demanding that the government intervene to target Wall Street. Environmental Advocates NY, a non-profit, says it is urging New York state officials to introduce regulations and laws that would compel banks operating in the world's biggest financial hub to take climate action.

The wave of NZBA exits follows behind-the-scenes tensions that have been brewing for more than two years.

In 2022, JPMorgan and Morgan Stanley were among banks pushing back against binding targets on climate finance. NZBA then watered down some requirements, and members stayed put.

But as the Republican Party grows more hostile towards climate-friendly organizations, the finance industry is repositioning itself.