While correlation doesn’t equal causation, it’s certainly interesting that we’ve seen six major US banks withdraw from the Net-Zero Banking Alliance (NZBA) as the inauguration of President-elect Trump approaches.
Since the 6th of December 2025, Bank of America, Citi, Goldman Sachs, JP Morgan, Morgan Stanley, and Wells Fargo have all walked away from the Alliance, but while this may be a setback for the NZBA, is it really a setback for sustainable finance and Net Zero overall?
First of all, Trump is no fan of ESG, famously outspoken on social media, and with his growing relationship with X owner Elon Musk, unlikely to struggle for air time. As such, it begs the question if leaving the NZBA may be a strategic move. Has the decision by the banks been driven by a desire to appear more aligned with the views of the incoming administration, as opposed to being based on any real ideological opposition to the idea of Net Zero and sustainability in general?
After all, in light of his election majority, it’s evident that Trump has major following. The banks in question may wish to try to avoid potentially negative attention from the White House, or come under attack from the future President, for fear of losing custom. It isn’t unimaginable to envision Trump issuing a rallying cry to his followers and calling for their money to be moved from banks labelled as “woke”.
Secondly, membership doesn’t guarantee action, in the same way as non-membership doesn’t guarantee action. This exodus of banks from the NZBA, while a blow for the Alliance, doesn’t automatically mean that the efforts of the banks to finance the Transition will stop. It is clear that fossil fuels are dying (even if perhaps more slowly than we would like), and banks will be aware of this, so it is perhaps fair to suggest that plain old common sense will prevail in the banking community.
In their efforts to limit exposure to risks, banks will be considering if investment in fossil fuels and related infrastructure is sensible in the long-term. A shiny new coal-fired power plant in a developing country may generate great returns for the first few years of its operation, but how long will it be before these sorts of assets become stranded? An asset can quickly become a liability (figuratively speaking) if you’re having to decommission it before it has generated enough returns to warrant the initial investment.
Furthermore, and any beliefs regarding climate change aside, the move away from fossil fuels and the transition to a Net Zero future arguably represents the single greatest economic opportunity of the age. Even the most climate sceptical banks won’t want to miss an opportunity to cash in on this, even if it is unfamiliar territory.
Similarly, just because these banks were a part of the NZBA, it doesn’t automatically mean they were trail-blazers in the Net Zero movement; their departure from the Alliance may not have much of an effect on global efforts, if they were just trundling along.
Overall, it is perhaps reasonable to suggest that this departure by the banks in question is not anything to be overly concerned about. What is maybe more important to watch is what the banks will do next, and what their financing activities will look like over the next few years. As with all thing’s sustainability related, memberships and commitments are great, but the proof is always in the pudding.