Major U.S. Banks Citigroup and Bank of America Exit Climate Alliance Amid Political Pressure

In a significant shift in the banking sector's approach to climate commitments, Citigroup and Bank of America announced their exit from the Net-Zero Banking Alliance (NZBA) on December 31, 2024. This decision follows similar moves by other major U.S. banks, including Wells Fargo and Goldman Sachs, and reflects growing political pressures against stringent climate policies.

Key Takeaways

• Citigroup and Bank of America have exited the Net-Zero Banking Alliance, a coalition aimed at reducing greenhouse gas emissions.
• Their departure follows exits by Wells Fargo and Goldman Sachs earlier in December.
• The banks cite progress towards their own climate goals while facing pressure from Republican lawmakers.
• The NZBA aims for net-zero emissions from member banks' lending and investment portfolios by 2050.

Background on the Net-Zero Banking Alliance

The Net-Zero Banking Alliance was established to unite banks globally in the fight against climate change, with a commitment to achieving net-zero emissions by 2050. Members pledged to align their lending and investment portfolios with climate science, aiming to significantly reduce carbon emissions.

Recent Exits from the Alliance

The recent exits of Citigroup and Bank of America mark a notable trend among U.S. banks distancing themselves from climate commitments. The following banks have recently left the NZBA:

1. Goldman Sachs
2. Wells Fargo
3. Citigroup
4. Bank of America

This trend raises questions about the future of corporate climate initiatives in the U.S., especially as political dynamics shift.

Reasons for Exiting

Both banks cited their progress towards individual climate goals as a reason for their departure. Citigroup emphasized its commitment to climate initiatives, stating it would focus on providing capital to emerging markets to support climate efforts. Bank of America reiterated its intention to assist clients in achieving their climate objectives despite leaving the alliance.

The banks' decisions come amid increasing pressure from Republican lawmakers who oppose limiting financing for fossil fuel industries. This political climate has led many financial institutions to reconsider their commitments to climate alliances.

Implications for Climate Initiatives

The exits of these major banks could have significant implications for climate finance and initiatives aimed at reducing carbon emissions. The NZBA's goal of achieving net-zero emissions by 2050 may be jeopardized as key players withdraw from the coalition.

Moreover, the political landscape in the U.S. is shifting, with a potential return of Donald Trump to the presidency, which could further influence corporate climate strategies. The recent lawsuit against major asset managers like BlackRock and Vanguard by Republican-led states highlights the growing tensions between climate activism and political interests.

Conclusion

The departure of Citigroup and Bank of America from the Net-Zero Banking Alliance signals a critical moment for corporate climate commitments in the U.S. As banks navigate the complex interplay of climate goals and political pressures, the future of climate finance remains uncertain. The actions of these financial giants will likely influence the broader banking sector's approach to sustainability and climate initiatives in the coming years.

Sources

• Citigroup, BofA join US lenders in exiting Net-Zero Banking Alliance By Reuters, Investing.com.
• Citigroup, BofA join US lenders in exiting Net-Zero Banking Alliance | Reuters, Reuters.
• Citigroup joins US lenders in exiting Net-Zero Banking Alliance, Yahoo Finance.
• Citi and BofA exit UN-backed global climate alliance for banks, Financial Times.
• Citigroup, BofA join Wall Street lenders in leaving global climate-banking alliance | South China Morning Post, South China Morning Post.