Big banks criticized for exiting climate finance alliance as ‘disgraceful’ reversal

Several major banks, including Morgan Stanley, Goldman Sachs, Wells Fargo, Citibank, and Bank of America, have recently withdrawn from the Net-Zero Banking Alliance (NZBA), sparking concerns about their commitment to climate goals. This departure has raised questions about the future of the Glasgow Financial Alliance for Net Zero (GFANZ) and its original mission to align investments with the Paris Agreement, especially with the growing global backlash against climate efforts.

Founded in April 2021 by Mark Carney, the COP 26 president at the time, the Glasgow alliance aimed to mobilize $100 trillion in climate finance by 2050. However, the recent decision by these major financial institutions to leave the alliance has cast doubt on the alliance’s direction and priorities moving forward. GFANZ announced a new focus on supporting low-carbon energy and economic transitions in emerging markets and developing economies, aiming to unlock $5 trillion for this purpose.

Climate activists have criticized the banks’ withdrawal from the alliance, accusing them of backtracking on their climate promises and prioritizing funding for fossil fuel projects. JPMorgan Chase, Citigroup, and Bank of America were identified as the top three banks financing fossil fuels in 2023, further fueling concerns about their environmental impact.

Amidst the backdrop of a changing political landscape, with upcoming changes in U.S. leadership and a growing backlash against environmental, social, and governance efforts, the departure of these banks from the net-zero alliance has significant implications. GFANZ has faced challenges in harmonizing emissions reporting, addressing the role of carbon credits, and navigating climate regulations across different jurisdictions.

Despite the banks’ decision to exit the alliance, they have affirmed their individual commitments to achieve net-zero emissions. The GFANZ leadership has stated that any financial institution working to mobilize capital for energy transition is welcome to participate in their efforts.

Overall, GFANZ aims to develop a financial system capable of financing the transition to net zero by creating new financial tools to support decarbonization, channeling capital to emerging markets, and advocating for policies that stimulate climate finance while driving economic growth. While the recent departures of significant financial institutions have raised concerns about the alliance’s future, GFANZ remains committed to its mission and goals.