Within a month, 6 largest U.S. banks leave UN Net-Zero Banking Alliance

Within one month of each other, six of the largest U.S. banks left the United Nations Net-Zero Banking Alliance (NZBA) not soon after Donald Trump was elected president.

Last month, Goldman Sachs was the first to withdraw from the alliance, followed by Wells Fargo, The Center Square reported.

By Dec. 31, Citigroup and Bank of America left, followed by Morgan Stanley on Jan. 6 and JPMorgan on Jan. 7.

They did so after joining the alliance several years ago pledging to require environmental social governance standards (ESG) across their platforms, products and systems.

According to the "bank-led and UN-convened" alliance, global banks joined, pledging to align their lending, investment and capital markets activities with a net-zero greenhouse gas emissions by 2050, NZBA explains.

Since April 2021, 141 banks in 44 countries with more than $61 trillion in assets had joined NZBA, the alliance says. That’s down from 145 banks with more than $73 trillion in assets it reported last month after Wells Fargo and Goldman Sachs withdrew.

"In April 2021 when NZBA launched, no bank had set a science-based sectoral 2030 target for its financed emissions using 1.5°C scenarios," it says. "Today, over half of NZBA banks have set such targets."

They started to drop off after President-elect Donald Trump vowed to increase domestic oil and natural gas production and pledged to go after “woke” companies.

They also announced their departure two years after 19 state attorneys general launched an investigation into them for alleged deceptive trade practices connected to ESG.

Four states led the investigation: Arizona, Kentucky, Missouri and Texas. Others involved include Arkansas, Indiana, Kansas, Louisiana, Mississippi, Montana, Nebraska, Oklahoma, Tennessee and Virginia. Five state investigations aren't public for confidentiality reasons.

In Texas, the state legislature passed a bill, which Gov. Greg Abbott signed into law, that prohibits governmental entities from entering into contracts with companies that boycott the oil and natural gas industry. The law also requires state entities to divest from financial companies that boycott the industry through ESG policies.

To date, 17 companies and 353 publicly traded investment funds are on Texas' ESG divestment list.

After financial institutions withdraw from the NZBA, they are permitted to do business with Texas, the office of Texas Attorney General says.

However, Texas Comptroller Glenn Hegar has expressed skepticism about companies claiming to withdraw from ESG commitments, noting there is often doublespeak in their announcements, The Center Square reported.

Notably, when leaving the alliance, a Goldman Sachs spokesperson said the company was still committed to the NZBA goals and has "the capabilities to achieve our goals and to support the sustainability objectives of our clients," EST Today reported. The company also said it was "very focused on the increasingly elevated sustainability standards and reporting requirements imposed by regulators around the world."

"Goldman Sachs also confirmed that its goal to align its financing activities with net zero by 2050, and its interim sector-specific targets remained in place," EST Today reported.

Five Goldman Sachs funds are listed in Texas' ESG divestment list.

While announcing it was leaving the alliance, a JPMorgan spokesperson also affirmed the company’s commitment to reaching net-zero emissions. "We aim to contribute to real-economy decarbonization by providing our clients with the advice and capital needed to transform business models and lower carbon intensity," the spokesperson said, Reuters reported.

Yahoo!Finance also notes that JPMorgan will continue to work with Glasgow Financial Alliance for Net Zero. “We will also continue to support the banking and investment needs of our clients who are engaged in energy transition and in decarbonizing different sectors of the economy,” the spokesperson said.

Citigroup and Bank of America also remain committed to net-zero objectives, including continuing to report on efforts to achieve 2030 net-zero targets and reducing CO2 emissions associated with corporate lending, FiNews reported.

The Comptroller's office remains committed to "enforcing the laws of our state as passed by the Texas Legislature," Hegar said. "Texas tax dollars should not be invested in a manner that undermines our state's economy or threatens key Texas industries and jobs."