Six major US banks have recently withdrawn from the Net Zero Banking Alliance (NZBA), a UN-sponsored initiative aimed at aligning the global banking sector with net-zero greenhouse gas emissions by 2050.

JP Morgan is the latest bank to depart, following Citigroup, Goldman Sachs, Wells Fargo, Bank of America and Morgan Stanley. The six banks left since the start of December.

Despite quitting the NZBA, several of these institutions have stated that they will maintain their involvement with the Glasgow Financial Alliance for Net Zero (GFANZ), the broader UN-backed initiative encompassing the NZBA and other climate coalitions.

“Americans aren’t rejecting climate change – they’re rejecting policies that don’t work.”

Desiree Fixler, finance professional and ESG whistleblower

A spokesperson at JP Morgan said: “JPMC is ending our membership in the Net Zero Banking Alliance (NZBA). We will continue to work independently to advance the interests of our firm, our shareholders and our clients and remain focused on pragmatic solutions to help further low-carbon technologies while advancing energy security.

“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. At this time, we plan to continue engaging with GFANZ, among others, to advance pragmatic solutions and market conditions that can help further a low-carbon and energy-secure future.”

JP Morgan has not changed its previously stated commitments which include their Sustainable Development Target to finance and facilitate $2.5 trillion in sustainable finance by the end of 2030. So far, they have reached $675 billion since the target was set in 2021.

Why did US banks leave NZBA?

Analysts and pundits have said the withdrawals are an attempt to head off “anti-woke” attacks from rightwing US politicians as the primary reason for their departure. In recent months, several US states have filed lawsuits against financial institutions, alleging that their climate-related policies and investments discriminate against certain industries, such as fossil fuels.

Harriet O’Brien, ESG consultant at Danesmead, agreed with this view but also sees positives: “The departure of US financial institutions from frameworks like NZBA is undoubtedly motivated by political pressures for some and that could have an impact on the pace of the transition.

“However, its important to remember that on departure, the likes of JP Morgan and others emphasised their plan to continue working towards their climate commitments independently. Perhaps this shows a level of maturity in the market whereby institutions no longer need that one all-encompassing target but are better able to define their own net zero journey aligning to business and investor priorities.”

“Institutions no longer need that one all-encompassing target but are better able to define their own net zero journey aligning to business and investor priorities.”

Harriet O’Brien, ESG consultant at Danesmead

Desiree Fixler, finance professional and ESG whistleblower, is a critic of NZBA. She said: “Net Zero is dead, at least in the USA. JP Morgan Chase was the last of the US majors to pull out.

“What killed it off in the US? Bloomberg states US banks buckled under pressure from the GOP. While a factor, there were many, many more reasons why the US red-pilled on this self-destructive ideology:

• High energy costs: Solar and wind are more expensive than fossil fuels, with issues like intermittency and grid connections driving up prices.
• Environmental harm: Wind and solar projects destroy land and wildlife.
• Economic necessity: Affordable fossil fuels boost growth and improve living standards, especially for vulnerable communities.
• Lack of readiness: Transitioning without long-term storage, grid upgrades, or cheaper alternatives isn’t feasible.
• Europe’s failure: Germany’s net zero-driven economic decline is a clear warning shot.
• Energy security matters: Fossil fuels are vital for national defense and stability.
• ESG calamity: ESG investing has underperformed and failed to provide impact, proving to be a costly, bureaucratic scam.

“Americans aren’t rejecting climate change – they’re rejecting policies that don’t work. Folks refuse to foot the bill for costly, unproven solutions for a problem that might or might not happen in the future.

“Blaming GOP pressure is a cheap shot. The truth is, common sense amongst the people prevailed in the USA.”

What next for NZBA

As at January 9, 141 banks remain as members of the alliance including founding large European banks Barclays, Lloyds Banking Group, BNP Paribas, HSBC, Credit Agricole and Santander; and leading Asian banks MUFG, Mitsubishi, and UFJ Financial Group.

GFANZ has responded by announcing a CEO-led restructure. The group will allow “any financial institution” supporting the green transition to participate. Therefore membership of a sector alliance such as NZBA will no longer be a requirement.

The group has pledged “to transition to an independent Principals Group, led by CEOs and leaders from financial institutions acting to address barriers faced in mobilizing capital for the transition around the world – including sovereign wealth funds, financial institutions, and market participants in countries with longer transition pathways.”