European banks have threatened to withdraw from the Net-Zero Banking Alliance (NZBA), the largest climate coalition in the banking sector, unless its stringent financial and environmental requirements are relaxed.
Executives in Europe and North America are concerned about the potential impact of Donald Trump’s return on international climate cooperation, particularly regarding net-zero emissions. There are fears that the United States may backtrack on its environmental commitments.
According to the Financial Times, several major European banks are reconsidering their NZBA membership following the withdrawal of prominent American banks, including JPMorgan, Citigroup, and Goldman Sachs. Reports indicate that four of the largest Canadian banks also exited the NZBA earlier this week, reflecting a decline in international support for the alliance.
Amid these withdrawals, leaders from the Glasgow Financial Alliance for Net Zero (GFANZ) are planning an urgent meeting to address the future of international climate cooperation in conjunction with the upcoming World Economic Forum in Davos. The GFANZ board typically holds regular meetings in the first quarter of each year to discuss climate strategies, goals, and enhance international collaboration.
The GFANZ senior leadership group includes notable financial figures such as HSBC CEO Georges Elhedery, Deutsche Bank CEO Christian Sewing, and UBS CEO Sergio Ermotti. Efforts to organize an urgent meeting about the future of GFANZ have faced delays due to scheduling conflicts, concerns over antitrust laws, and political divisions. A tentative date for the meeting has been set for early next month, according to close sources.
In the United States, right-wing politicians have intensified their attacks on companies that advocate for climate-conscious policies, especially since Trump returned to the White House. These criticisms primarily focus on policies aimed at mitigating climate change and promoting environmental sustainability, which some political factions view as obstacles to economic development.
US banks have been accused of colluding to obstruct financing for oil and gas companies by 22 Republican attorneys general. Simultaneously, the Net Zero Asset Managers (NZAM) initiative, a parallel group of asset managers, announced that it would cease tracking the implementation and reporting of membership criteria and conduct a review to ensure it remains "fit for purpose." This month, the finance giant BlackRock left the initiative, following Vanguard Group's withdrawal in 2022.
Several banks have indicated that unless the banking alliance aligns its procedures with those of the NZAM, they will begin the process of exiting. These banks are seeking to eliminate formal tracking and address issues perceived as antitrust violations in the US.
"American public sentiment is not in favor of coordinated action, given the US lawsuits surrounding antitrust and illegal coordination," remarked one individual associated with the asset management group. This week, Tennessee dropped a prominent lawsuit against BlackRock after the $11.6 trillion asset manager committed to disclosure regarding its voting decisions on corporate proxies and pledged to avoid coordinating those decisions with other investors.
