Why Are Banking Giants Citi, etc Quitting Net Zero Alliance?

The Net Zero Banking Alliance was founded to unite banks in aligning their lending, investment and capital markets activities with net zero greenhouse gas emissions by 2050.

Made up of some of the largest banks from around the world, the UN-convened group is designed to promote sustainable investing and prioritisation of net zero goals. 

The last few weeks, however, have seen a mass exodus of the largest American banks in the group. 

CitiGroup, Goldman Sachs, Wells Fargo, Bank of America and Morgan Stanley have all left the NZBA, leaving JP Morgan Chase as the only large American bank in the group.

EDIT 8 Janary 2025 - JP Morgan Chase have exited NZBA. 

While none of the organisations have cited specific reasons for leaving NZBA, they are all leaving between Donald Trump’s election and inauguration. The incoming US President is publicly in favour of oil and gas investment, and has referred to climate change as a “hoax”, which is raising concerns for how the US will impact global sustainability going forward.

“Collaboration will be an essential part of achieving the goal of a net zero economy and the NZBA, with its industry-led platform, has an important role to play in facilitating decarbonisation and effective capital allocation to the real economy,” said David Solomon, Chairman and CEO of Goldman Sachs, when the organisation joined the NZBA in 2021. 

“For us to succeed, the efforts of businesses and markets must be matched with sound public policy that balances current energy capabilities with support for new technologies and innovation.”

What is the Net Zero Banking Alliance?

The Net-Zero Banking Alliance (NZBA) was founded on 21 April 2021 by 43 leading global financial institutions under the auspices of the United Nations Environment Programme Finance Initiative (UNEP FI).

The NZBA was created in response to the urgent need for climate action and to support the goals of the Paris Agreement. It aims to provide a standardised framework for banks to set credible, science-based net-zero targets and strategies. 

Founding members, which included Citibank and Bank of America, agreed to reconfigure their lending and investment portfolios ‘to align with pathways to net zero by 2050 or sooner’.

By joining the alliance, banks commit to:

• Aligning their lending and investment portfolios with net zero emissions by 2050
• Setting interim targets for 2030 or sooner
• Focusing on the most carbon-intensive sectors
• Annually reporting on progress and emissions

Since its inception, the NZBA has grown significantly, now representing nearly half of global banking assets and, despite the departure of the large US banks, it still has 142 members from 44 countries. The exit does leave the European banks in a position of more power, accounting for the largest share in the NZBA’s US$64tn in assets.

Banks remaining in the coalition include HSBC, Barclays and BNP Paribas.

“A commitment to financing the transition to net zero is essential. It’s important that the banking sector is committed to providing the financial support needed to help customers on that transition,” said Noel Quinn, former CEO of HSBC when the bank joined NZBA in 2021.

“But we have to establish a robust and transparent framework for monitoring progress against that objective and we want to set that standard for the banking industry.

“Industry-wide collaboration is essential in achieving that goal.”

UNEP Finance Initiative

The NZBA is part of the UN Environment Programme’s Finance Initiative (UNEP FI), which has been connecting the UN with financial institutions from around the world to shape the sustainable finance agenda for more than three decades. 

Founded in 1992, UNEP FI was the first organisation to engage the finance sector with sustainability and is still a trailblazer in responsible investment principles.

More than 500 banks and insurers with assets exceeding US$170tn are individually implementing UNEP FI’s Principles for Responsible Banking and Principles for Sustainable Insurance.

Explore the latest edition of Sustainability Magazine and be part of the conversation at our global conference series, Sustainability LIVE. 

Discover all our upcoming events and secure your tickets today.

Sustainability Magazine is a BizClik brand