The news: Morgan Stanley, Citigroup, Bank of America, Wells Fargo, and Goldman Sachs have withdrawn from the UN-backed Net Zero Banking Alliance, per Yahoo Finance. Other climate coalitions, like Climate Action 100+, have also seen withdrawals from major firms like JPMorgan, State Street, and Pimco.
What this means: The shift comes as the US prepares for a second Trump administration, which is expected to renew opposition to international climate agreements and regulations. As the political environment becomes increasingly polarized, banks are likely trying to strengthen relationships with the incoming administration.
Leaving the groups doesn’t necessarily mean these banks have abandoned all climate-related goals. For example, Morgan Stanley and Citigroup told Yahoo Finance they’re still committed to reaching net-zero emissions.
A competitive opening? This pivot away from ESG-related initiatives isn’t new: In a challenging banking environment, many FIs are looking for ways to cut costs.
But others have centered their marketing strategies around social and environmental causes to differentiate their brands from competitors. This focus could resonate especially well with Gen Zers, who have pushed for transparency in green initiatives.
Before making decisions about climate goals and agreements, FIs must consider the potential impact to relationships with younger customers, who have been slowly leaving bigger FIs.
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