Signs are emerging of what impact Donald Trump’s administration might have on green finance, as more US banks announce their departure from the Net-Zero Banking Alliance.
JP Morgan became the latest US bank to quit the Net-Zero Banking Alliance on Tuesday (7 January). This marks the sixth major departure in just one month, with the nation’s largest banks – including Goldman Sachs, Wells Fargo, Citi, Bank of America and Morgan Stanley – having already exited the coalition.
The Net-Zero Banking Alliance, founded in April 2021 by the UN Environment Programme Finance Initiative (UNEP FI), is a global group of banks committed to achieving net-zero emissions in their lending and investment portfolios by 2050.
Though ahead of Trump’s return to the White House on 20 January, Republicans have labelled the coalition as “woke”, according to Bloomberg.
Last month, Republican Jim Jordan, Chair of the House Judiciary Committee, argued that financial environmental alliances have formed “a climate cartel.”
Interestingly, JP Morgan issued a statement after its exit, reaffirming its commitment to reducing carbon emissions but did not provide a specific reason for leaving the alliance.
“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,” a JP Morgan spokesperson said.
Currently, only three US banks remain in the alliance: Amalgamated Bank, Areti Bank and Climate First Bank. However, the alliance still boasts 141 members from 44 countries, including major European institutions like Banco Santander, Barclays, Deutsche Bank and HSBC.
The term “Net-Zero” has become increasingly common in recent years, with large companies and organisations across various sectors embracing it. However, this has led many to question whether these initiatives are simply box-ticking exercises or marketing stunts.
Paul Holland, CEO of Beyond Encryption, addressed this concern in a December article for Payment Expert, explaining why these efforts are far from superficial.
Holland highlighted a range of benefits that come with sustainability initiatives, pointing out how they can bring transformative changes to areas like KYC processes and communications, among others.
As of the time of this article, the Net-Zero Banking Alliance has yet to respond to these departures. Payment Expert has reached out to the organisation for comment.
