Stirring the Pot: The GOP's Crusade Against Green Financing and the Net-Zero Banking Alliance
The Big Apple
U.S. financial institutions are abandoning climate change initiatives.
The financial world is bracing for turbulence as the US grapples with a heated battle over eco-friendly funding. Last week, three Wall Street titans - Morgan Stanley, Citigroup, and Bank of America - severed ties with the Net-Zero Banking Alliance (NZBA), following in the footsteps of Goldman Sachs and Wells Fargo. Rumors are swirling that industry heavyweight J.P. Morgan might be the next to jump ship from the UN-backed climate initiative.
When asked by the Financial Times, J.P. Morgan remained tight-lipped, citing regular reviews of memberships. The NZBA, founded in April 2021, pledges to realign their financial activities toward a carbon-neutral future by 2050.
Losing Ground, Majorly
Since the alliance's inception and up until October 2024, membership has climbed from 43 banks in 23 countries to 144 institutions across 44 nations. Yet, the departure of US powerhouses has left a substantial void. The withdrawing banks collectively manage a whopping $10.6 trillion in assets, and if J.P. Morgan pulls out, another $4.2 trillion would be on the line.
Analysts trace this retreat to the looming second term of Donald Trump. A climate change skeptic, Trump's likely return to office has sparked fears of dismantling various sustainability regulations.
A Right-Wing Onslaught
Trump is jumping into a well-orchestrated crusade choreographed by right-wing factions targeting Environment, Social, and Governance (ESG) investments for a remarkable three years, as per S&P Global. Public pension funds from Republican-controlled states have been pulling dollars from asset managers, putting pressure on firms like Blackrock to scale back their sustainability initiatives.
While US banks continue to express support for ESG principles, the storm shows no sign of abating. Golden Sachs is boasting "advanced progress" towards its net-zero goals, while Citigroup is focusing on the Glasgow Financial Alliance for Net Zero rather than the NZBA. However, experts are expecting a wave of pressure on these initiatives in the US.
Behind the Scenes: Glimpses of the Revolt
- Republican states have passed legislation limiting ESG investments, with four states sporting GOP trifectas (Arkansas, Idaho, Utah, and Wyoming) enacting such bills in 2025[1].
- House Republicans have petitioned the SEC to pull ESG disclosures, implying broader resistance to ESG policies at the federal level[2].
- Trump's recent executive order seeks to undermine state climate policies, which could ripple across the broader regulatory landscape that the NZBA's member banks navigate[3].
- The upcoming term of Donald Trump has sparked concerns within the banking sector, as it might lead to the dismantling of sustainability regulations and potentially pressure banks to withdraw from the Net-Zero Banking Alliance (NZBA).
- J.P. Morgan, a Wall Street titan, remains tight-lipped about its membership status within the NZBA, leading speculation that it may be the next bank to leave the UN-backed climate initiative.
- Right-wing factions in the US have been targeting Environment, Social, and Governance (ESG) investments for over three years, resulting in US states withdrawing funds from asset managers and scaling back their sustainability initiatives.
- Amid this onslaught, banks like Goldman Sachs and Citigroup have shifted their focus from the NZBA to other net-zero initiatives, such as the Glasgow Financial Alliance for Net Zero.
- Experts are anticipating increased pressure on these net-zero initiatives and eco-friendly funding in the US as Republican states pass legislation limiting ESG investments, petition the SEC to pull ESG disclosures, and undermine state climate policies.
