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European banks withdraw from the sector’s biggest climate alliance unless regulations are eased, as executives on both sides of the Atlantic worry about the future of net-zero cooperation ahead of President Donald Trump’s inauguration He is threatening to do so.
Major European financial institutions are reconsidering their membership in the Net Zero Banking Alliance (NZBA) after bulge-bracket US peers such as JPMorgan, Citigroup and Goldman Sachs left the group. three people familiar with their thinking said.
On Friday, Canada’s four largest financial institutions also announced they would withdraw from the Climate Coalition.
Separately, executives at the umbrella group known as the Glasgow Financial Alliance for Net Zero (Gfanz), of which the banking group was a member until earlier this month, have announced plans for future climate changes. It has struggled to convene meetings to discuss the future of cooperation. The World Economic Forum will be held in Davos this week.
Launched about four years ago, Gfanz’s “principals” typically meet in the first quarter of each year. The group includes HSBC CEO Georges Ergederi, Deutsche Bank’s Christian Sewing and UBS’s Sergio Ermotti.
But attempts to hold a meeting this week to discuss the alliance’s future were derailed by scheduling issues, antitrust concerns and political turmoil, people familiar with the situation said. Instead, the meeting is tentatively scheduled for early next month, they said.
Right-wing politicians in the United States are intensifying their attacks on the policies of “woke” companies ahead of President Trump’s return to the White House. U.S. banks are being targeted by 22 Republican attorneys general for conspiring to block loans to oil and gas companies.
A parallel club of asset managers, the Net Zero Asset Managers Initiative, has stopped tracking the ‘implementation’ and ‘reporting’ of its membership standards, ensuring that it remains ‘fit for purpose’ It was announced this week that a review would be carried out to confirm that this is the case. This month, BlackRock left the lead. Vanguard will be withdrawn in 2022.
“Several banks have said they will begin the process of exiting unless the banking partnership moves in the same direction as their wealth management initiatives,” said a person familiar with the bank’s thinking. It added that the financiers wanted to “end all formal pursuits and any issues deemed to violate U.S. antitrust laws.”
“The American public is not enthusiastic about coordinated action, given that the U.S. case is about antitrust and illegal coordination,” said one of the signatories, an asset manager.
Tennessee issued a landmark blow to BlackRock this week after the $11.6 trillion asset manager vowed to clarify its reasons for voting on corporate proxies and avoid coordinating decisions with other investors. The lawsuit was dropped.
A European executive involved with Gfanz said: “Americans are totally obsessed with not getting sued by the state of Texas. The banks were the worst.”
Ben Caldecott, founding director of Oxford University’s Sustainable Finance Group, said Gfanz was “being dismantled step by step”. “Some[alliances]have sunset clauses, while others are like zombies that persist despite not being very useful.”
Gfanz said it had achieved its original goal of “developing the building blocks of a financial system that can finance the transition to net zero.”
This month the company announced it would no longer act as an umbrella for the industry’s net-zero group and would instead focus on activating investment in the green transition by a group of senior financiers.
Former Bank of England governor Mark Carney, who launched Gfanz in 2021, launched a campaign to become Canada’s prime minister this week. He is no longer a member of Gfanz’s management team, according to the group’s website.
Separately, the Fed announced Friday that it was leaving the “green” central bank network that Mr. Carney co-founded in 2017.
Deutsche Bank and UBS declined to comment. HSBC and people close to Mr. Carney did not respond to requests for comment. The NZBA said it would “work with all members on strategic priorities” in line with its governance process.
Additional reporting by Brooke Masters in New York
