Goldman Sachs leaves NZBA ahead of capital market emissions requirements

Goldman Sachs is the first high-profile bank to leave the Net Zero Banking Alliance ahead of new requirements to include capital market emissions in climate targets.

The US bank did not give a precise reason for its decision to leave the alliance, which requires members to set targets to decarbonise their business in line with the goals of the Paris Agreement.

But the announcement comes amid concerns that Donald Trump’s second term as President will exacerbate the so-called ‘anti-ESG’ sentiment in the US, and just months before the implementation of new target-setting requirements within the NZBA.

Net Zero Banking Alliance update

The update to the alliance’s target-setting guidelines was approved in March 2024, and will include the addition of capital market emissions in member banks’ net zero targets, starting in 2025.

The change reflects improvements around the calculation of financed emissions calculations, with efforts in this area spearheaded by the Partnership for Carbon Accounting Financials (PCAF). 

For the first time in 2024, HSBC (an NZBA member) disclosed its own “facilitated emissions” based on PCAF recommendations, giving a  33% weighting to emissions that result from debt and equity capital markets and syndicated loans.

Since then, other banks have followed suit – but not Goldman Sachs.

Earlier this year, the US bank’s asset management arm (Goldman Sachs AM) was one of several firms to leave the Climate Action 100+ coalition ahead of more stringent guidelines around its members’ oil and gas financing activities.  

Goldman Sachs’ sustainable finance ambitions

Goldman Sachs has a target of providing US$750 billion of sustainable finance by 2030, and since 2020, it has allocated US$555 billion towards that goal – including around US$302 billion to climate transition initiatives. 

Upon joining the NZBA in 2021, the bank’s CEO David Solomon said: “Collaboration will be an essential part of achieving the goal of a net zero economy and the NZBA, with its industry-led platform, has an important role to play in facilitating decarbonization and effective capital allocation to the real economy. For us to succeed, the efforts of businesses and markets must be matched with sound public policy that balances current energy capabilities with support for new technologies and innovation.”

Since 2020, the bank has also provided US$129.8 billion of direct funding to fossil fuel companies and Solomon made it clear in Goldman Sachs’ 2023 sustainability report that it will “continue to finance and advise our clients in the energy sector”, while also investing in decarbonisation technologies.