Recently, several major US banks, including Goldman Sachs, Wells Fargo, Citigroup, and Bank of America, have successively withdrawn from the Net Zero Banking Alliance (NZBA). This decision has attracted public attention, especially as these banks are facing political pressure from the Republican Party regarding antitrust laws.
What is NZBA?
The NZBA was established in 2021 by the United Nations, bringing together over 100 leading banks worldwide committed to aligning financial operations with the goal of achieving net-zero emissions by 2050. However, the alliance has faced criticism from the Republican Party, which argues that climate initiatives harm economic interests and violate antitrust laws.
The Wave of Withdrawals by Major Banks
Goldman Sachs: On December 8, Goldman Sachs announced its departure from the NZBA without providing specific reasons. Nonetheless, the bank remains committed to supporting sustainable development. In 2019, Goldman Sachs pledged to allocate $750 billion to sustainable financing by 2030 and had achieved about 75% of this goal according to its 2023 sustainability report.
Wells Fargo: On December 20, Wells Fargo—the fourth-largest bank in the US—also announced its withdrawal from the NZBA, following in Goldman Sachs' footsteps.
Citigroup and Bank of America: These two banks also left the alliance, stating that they would continue to make progress toward net-zero emissions through internal initiatives while maintaining collaboration with clients.
Morgan Stanley: On January 2, US financial giant Morgan Stanley became the latest bank to exit the NZBA. Earlier that week, Citigroup and Bank of America had also announced their withdrawals.
This wave of withdrawals began just a month after former President Donald Trump won the election. When Goldman Sachs—the first bank to leave—announced its exit, the total assets of the alliance stood at $73 trillion. Following the successive exits of major banks, the total assets of NZBA members have decreased to $64 trillion.
Currently, the alliance has 142 banks remaining, including four from the US: Amalgamated, Areti, Climate First, and JPMorgan Chase. However, Wall Street speculates that JPMorgan Chase—the last major US bank in the NZBA—may also soon withdraw, as it had already exited another climate-focused alliance, Climate Action 100+, earlier last year.
The wave of withdrawals from this alliance began just one month after Donald Trump's election victory. When Goldman Sachs—the first bank to leave—exited, the total assets of the alliance stood at $73 trillion. Following the successive departures of major banks, the total assets of the alliance's members have decreased to $64 trillion.
As of now, the alliance has 142 remaining banks, including four from the United States: Amalgamated, Areti, Climate First, and JPMorgan Chase. Wall Street speculates that JPMorgan Chase, the last major US bank in the NZBA, may also soon withdraw. In fact, the bank had already left another climate-focused alliance, Climate Action 100+, earlier last year.
Reasons and Impact:
Trump's Position:
Since his presidential campaign, Donald Trump has clearly expressed his support for fossil fuel extraction in the United States, considering it a vital driver of economic growth and national energy security. The US withdrew from the Paris Climate Agreement in 2017 during Trump’s first term and rejoined the accord in 2021 under President Biden. During the 2024 presidential campaign, Trump’s spokesperson announced that he plans to withdraw the US from the Paris Agreement again once he takes office. His policies emphasize reducing environmental regulations to create favorable conditions for the energy industry, particularly oil, gas, and coal.
Opposition from the Republican Party:
Banks are facing strong opposition from the Republican Party, which currently controls both the Senate and the House of Representatives. The party supports fossil fuel extraction and argues that climate initiatives reduce coal production and increase energy prices. Major asset management firms such as BlackRock, Vanguard, and State Street have been sued in 11 states led by Republican governors. These lawsuits allege that their climate-related actions violate antitrust laws and negatively impact traditional energy sectors.
The NZBA has also raised concerns across various industries, particularly agriculture and fossil fuels. Twelve states with Republican leadership argue that net-zero goals are unrealistic and cause severe economic damage. According to senior policy analyst Bonner Russell Cohen, the financial power of NZBA, with its commitment to only invest in projects aligned with net-zero emission goals, has raised concerns in many industries, including American agriculture. Agricultural officials from 12 states sent a letter to U.S. members of NZBA in early 2024, describing the goal of achieving net zero in agriculture as having a "catastrophic impact." They argued that the roadmap is impractical and costly, involving measures such as transitioning to electric machinery, installing renewable energy systems, using organic fertilizers, altering irrigation systems, and reducing meat consumption, which could severely affect jobs and agricultural production.
Previously, the Republican-led House Judiciary Committee released a report presenting evidence of collusion and anti-competitive behavior in the financial sector. They accused financial organizations of imposing sustainable ESG (Environmental, Social, and Governance) goals on US businesses. ESG is a criterion introduced by climate alliances.
House Judiciary Committee Chairman Jim Jordan specifically criticized climate alliances such as Climate Action 100+ and the Glasgow Financial Alliance for Net Zero (GFANZ)—of which the NZBA is a subset—accusing them of undermining fair competition.
According to investment manager Mark Segal, GFANZ member organizations have faced significant pressure from Republican politicians over the years. Many lawmakers from the party have warned financial institutions such as banks, insurance companies, asset owners, and investors that they could face legal disputes for participating in climate change alliances. Additionally, these organizations have been threatened with exclusion from government contracts.
Although it remains unclear what impact President-elect Donald Trump’s return to the White House in the coming weeks will have, one certainty is that the Republican Party has intensified pressure on banks since Trump’s victory.
As a result, banks and large corporations are becoming increasingly cautious in their decisions to avoid conflicts with the new administration, gradually withdrawing from climate initiatives.
Abandoning Climate Efforts?
Analysts suggest that the continuous withdrawal of major banks from the Net Zero Banking Alliance (NZBA) signals broader uncertainties in advancing sustainable finance as they face conflicts from multiple stakeholders. Investors demand accountability for climate goals, while lawmakers argue that these initiatives disadvantage traditional industries, including fossil fuels.
The downsizing of collective initiatives like the NZBA may slow the mobilization of trillions of dollars in capital required for the transition to a low-carbon economy. Without a unified framework, banks may adopt fragmented approaches, reducing the overall effectiveness of global climate action.
The mass withdrawal of major banks from the NZBA just before Donald Trump’s return to the White House has raised questions about the impact of these moves on global climate efforts. This development underscores the significant influence of political dynamics on the strategic decisions of financial institutions.
Banks Continue Commitment to Climate Change Mitigation
Despite leaving the NZBA, major banks like Morgan Stanley and Bank of America remain committed to net-zero emissions goals.
Morgan Stanley: The bank has affirmed that it will continue addressing climate change through its business model, providing advisory and financial services to help clients transition to sustainable practices and reduce carbon emissions. Morgan Stanley maintains its net-zero commitment despite its departure from the NZBA.
Bank of America: Known for achieving carbon neutrality in its operations in 2021, Bank of America has pledged to continue supporting clients in climate change initiatives and maintaining sustainable programs.
Citibank: This bank decided to shift its focus toward supporting the Glasgow Financial Alliance for Net Zero (GFANZ) rather than maintaining its role in the NZBA. A Citi representative stated that the bank would prioritize supporting the transition to a low-carbon economy through GFANZ.
While there is a shift in alliances, banks continue to uphold their climate goals and pursue sustainable development initiatives. However, they face increasing political pressure, particularly as climate-related loans and investments clash with evolving political trends in Washington.
Balancing Sustainability Goals with Political Pressure
According to Saptakee S from Carbon Credits, banks’ withdrawal from major climate alliances does not equate to abandoning their climate commitments. Instead, they may explore new business models and play crucial roles in collective global climate action, even with shifts in alliances and strategies.
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