U.S. Banks to Depart from the Net-Zero Banking Alliance

U.S. banks Citigroup, and Bank of America, announced that they are exiting the Net-Zero Banking Alliance (NZBA), a group of global banks that have pledged to curb greenhouse gas emissions, reported Reuters.

Goldman Sachs announced on December 6 that it was leaving the NZBA, followed shortly by Wells Fargo.

Financial firms, historically criticized for their connections to the fossil fuel industry, have made efforts to incorporate net-zero standards more prominently into their operations.

However, they have begun scaling back on some initiatives to avoid irking Republican policymakers who are opposed to limiting the financing of fossil fuels.

Citi said it had made progress toward its own net-zero goals and decided to leave the NZBA.

BofA, in an emailed statement to Reuters, said: "We will continue to work with clients on this issue and meet their needs."

The NZBA aims to bring down carbon emissions from the lending and investment portfolios of its members to zero on a net basis by 2050.

While none cited factors for leaving, the two-year-long U.S. backlash against environment, social and governance investing cannot be ignored.

For example, in 2023 attorneys general from 27 states wrote to the Senate and House of Representatives claiming that the Department of Labor’s rule permitting ESG investments in retirement plans was “illegal”.

More recently investors including BlackRock have been facing legal challenges against primarily Republican politicians and lawmakers over their climate efforts.

For their part, the banks largely avoided giving a direct reason for needing to leave the NZBA, instead saying they remained committed to helping clients transition to a low-carbon economy and disclosing their actions.