1 week Ago
The New York Stock Exchange in New York's Financial District on Dec. 31. U.
S. banks including Morgan Stanley, Bank of America and Goldman Sachs have withdrawn from the Net-Zero Banking Alliance. Peter Morgan/The Associated Press Several major U.
S. banks have quit a global alliance to fight climate change as opposition to environmental, social and governance measures heightens political risks associated with Donald Trump’s return to the White House. Morgan Stanley is the latest to leave the Net-Zero Banking Alliance (NZBA), which was formed in 2021 to marshal hundreds of billions of dollars required over the next 25 years to slash greenhouse-gas emissions and shift to a low-carbon economy.
It followed the exit over the past month of Bank of America Corp. BAC-N , Citigroup Inc. C-N , Wells Fargo & Co.
WFC-N and Goldman Sachs Group Inc. GS-N from the organization, which is a subgroup of the Glasgow Financial Alliance for Net Zero, known as GFANZ. Former Bank of Canada and Bank of England governor Mark Carney and Michael Bloomberg, the founder of Bloomberg L.
P. and a former mayor of New York, are co-chairs of GFANZ. Morgan Stanley did not provide a reason for its exit from NZBA, though it has made the move against a backdrop of growing backlash to ESG and threats of antitrust action among Republican politicians at the federal and state levels.
“Morgan Stanley has decided to withdraw from the Net-Zero Banking Alliance,” spokeswoman Carrie Hall said in a statement Thursday. She stressed that the bank remains committed to achieving its net-zero goals. “We aim to contribute to real-economy decarbonization by providing our clients with the advice and capital required to transform business models and reduce carbon intensity.
” Many of the other banks offered similar messages – that their decisions to leave the group did not mean they were abandoning their net-zero goals or their efforts to help clients meet their emission-reduction targets. Bank of America pointed out that its chief executive officer, Brian Moynihan, is a member of the GFANZ principals group, which is in charge of strategy and priorities, and Citigroup said it remains a supporter of GFANZ and its aim of removing barriers to getting capital to emerging markets. NZBA spokesman Daniel Storey declined to comment on the U.
S. banks’ exodus from the alliance and what it means for the future of the organization. Opposition to ESG has been building in the U.
S. for the past few years, and the shift to the political right after the November election is expected to intensify the pushback. A number of Republican-led states, including Texas, West Virginia and Florida, have already sought to penalize financial institutions and investment firms for employing ESG in their businesses, arguing it is aimed at hobbling fossil-fuel industries.
Canadian banks have been ensnared by such policies. Royal Bank of Canada and Bank of Montreal, for example, have had to assure governments in Texas and West Virginia that they do not eschew lending to the oil and coal industries. The Canadian Bankers Association did not confirm whether the country’s lenders are still members of NZBA but said each bank implements and reports on its own climate strategies and plans.
“The banking sector in Canada understands the important role that it can play in facilitating an orderly transition to a lower-carbon economy, supporting collaborative approaches between the public and private sectors,” CBA spokesperson Maggie Cheung said in an e-mailed statement. RBC, BMO, Bank of Nova Scotia and Canadian Imperial Bank of Commerce declined requests for comment on their commitment to the alliance. Toronto-Dominion Bank and National Bank of Canada did not respond to requests for comment.
In November, Texas Attorney-General Ken Paxton sued BlackRock Inc., State Street Corp. and Vanguard Group, accusing the world’s largest institutional investors of constricting the coal industry through “anticompetitive trade practices” by buying up shares and pushing green-energy goals.
The asset managers have been members of the Net Zero Asset Managers initiative – another group under GFANZ – though Vanguard quit two years ago. They have called the charges baseless. In Washington, the House Judiciary Committee, chaired by Ohio Republican Jim Jordan, said last June it had evidence of “a ‘climate cartel’ consisting of left-wing activists and major financial institutions that collude to impose radical environmental, social, and governance goals on American companies.
” It said it would investigate if current antitrust penalties were enough of a deterrent to such “collusion.” NZBA has faced friction among its members in the past . In 2022, Morgan Stanley and Bank of America were among U.
S. banks that said they could leave over fears of legal action if they are required to divest from some high-emitting sectors in the push to decarbonize. At the same time, Canada’s Big Six banks expressed worries about legal and governance risks tied to the net-zero banking group and whether it meant having to pull support for oil and gas clients, which make up a major part of the country’s economy.
The NZBA chair later calmed nerves by clarifying that the alliance did not have decision-making authority over its members. With a report from Stefanie Marotta.
