JP Morgan completes Wall Street’s exodus from Net Zero Banking Alliance

JP Morgan, the United States’ largest bank by assets, has now exited the Net Zero Banking Alliance, completing Wall Street’s exodus from the UN climate initiative less than two weeks before Donald Trump begins his second term as President.

The exit follows similar moves by Citi, Bank of America, Wells Fargo, Goldman Sachs and Morgan Stanley, all over the past month or so. It means that all six of the country’s top banks have now left the NZBA alliance, which aims to accelerate the banking sector’s Paris-aligned climate transition.

"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," JP Morgan said in a statement.

Banks playing it safe as they prepare for Trump presidency

While none of the banks have given a clear reason for their departure, experts believe it is a response to growing Republican pressure on climate initiatives that they argue violate anti-trust regulations.

With incoming President Trump, a vocal climate change denier, due to be inaugurated on January 21, the country’s financial sector appears to be playing it safe by removing themselves from climate-focused associations.

The move, however, has been strongly criticised by campaigners. Allison Fajans-Turner, Bank Engagement and Policy Lead at Rainforest Action Network (RAN), said: “America’s largest banks are making a new year’s resolution to turn back on their climate promises, disgracefully ending 2024 – a year marred by continued bank funding for fossil fuel expansion and policy backtracking.”

A chance for NZBA to raise the bar

Others see the US banks’ exit as an opportunity for NZBA to raise its ambitions. "While it is concerning that some US banks are sending a signal to the market that climate change has become less of a priority for them, the NZBA Secretariat should see their departure from the alliance as an opportunity to work with remaining members to set more ambitious standards for the industry, in a coalition of the willing,” suggested Jeanne Martin, Head of Banking Programme at ShareAction.

"US banks tend to lag behind their European peers when it comes to climate, and have often been able to influence the level of ambition of climate voluntary initiatives such as the PCAF Capital Markets Working Group and the NZBA Steering Group. Their departure from the NZBA could help create the space needed for regulators to set more ambitious policies and embolden investors to ask their US bank holdings to follow suit,” she added.

But NZBA's umbrella organisation, the Glasgow Financial Alliance for Net Zero (GFANZ) recently made the opposite move, loosening its mandate and getting rid of its strict joining criteria to allow “any financial institution working to mobilise capital and lower the barriers to financing energy transition to participate”.

In its statement, JP Morgan added that it plans "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”.