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European banks have threatened to pull out of the sector’s largest climate alliance unless it softens its rules, as executives on both sides of the Atlantic fret about the future of net zero collaboration ahead of Donald Trump’s inauguration.
Top lenders in Europe are reconsidering their membership of the Net Zero Banking Alliance (NZBA), according to three people familiar with their thinking, after bulge-bracket US peers including JPMorgan, Citigroup and Goldman Sachs quit the group.
On Friday four of Canada’s biggest lenders also said they were withdrawing from the climate coalition.
Separately, the senior ranks of the umbrella group called the Glasgow Financial Alliance for Net Zero (Gfanz), of which the banking group was one part until earlier this month, have been struggling to convene a meeting to discuss the future of climate collaboration, ahead of the World Economic Forum in Davos this week.
The “principals” of Gfanz — launched almost four years ago — typically meet in the first quarter of each year. This group includes HSBC chief executive Georges Elhedery, Christian Sewing of Deutsche Bank and Sergio Ermotti of UBS.
However, efforts to organise a meeting this week to discuss the future of the alliance were scuppered by scheduling issues, antitrust concerns and political distractions, according to people familiar with the situation. A meeting has instead been provisionally scheduled for early next month, they said.
Rightwing politicians in the US have increased their attacks on “woke” company policies ahead of Trump’s return to the White House. US banks have been targeted by 22 Republican attorneys general who accused them of colluding to block finance to oil and gas companies.
A parallel club for asset managers — the Net Zero Asset Managers initiative — announced this week that it would stop tracking “implementation” and “reporting” on membership criteria, and conduct a review to ensure it was still “fit for purpose”. This month BlackRock left the initiative; Vanguard quit in 2022.
“Several banks have said that unless the banking alliance goes the same way [as] the asset management initiative, they will begin the process to leave,” said one person familiar with their thinking. Those lenders wanted to “end all formal tracking and any issues that are perceived contrary to US antitrust”, they added.
One signatory of the asset manager group said: “The US folks are not keen about co-ordinated action given that the US lawsuits are about antitrust and illegal co-ordination.”
Tennessee dropped a landmark lawsuit against BlackRock this week after the $11.6tn money manager promised to disclose the reasons for its votes on corporate proxies and avoid co-ordinating those decisions with other investors.
One European executive involved in Gfanz said: “The Americans are totally obsessed about not being sued by Texas. The banks have been the worst.”
Gfanz has “been dismantled step by step”, said Ben Caldecott, founding director of Oxford university’s Sustainable Finance Group. “Some [alliances] have a sunset clause and others like zombies persist even though they’re not very useful.”
Gfanz said it had achieved its initial goal of “developing the building blocks of a financial system capable of financing the transition to net zero”.
This month it said that it would no longer serve as an umbrella for industry net zero groups, focusing instead on galvanising investments in the green transition by a group of senior financiers.
Former Bank of England governor Mark Carney, who launched Gfanz in 2021, kicked off his campaign to become Canada’s prime minister this week. He is no longer a member of Gfanz’s leadership team according to the organisation’s website.
Separately, the Federal Reserve Board said on Friday that it had left a “green” network of central banks which Carney co-founded in 2017.
Deutsche Bank and UBS declined to comment. HSBC and people close to Carney did not respond to a request for comment. NZBA said it would “engage with all members on strategic priorities” in line with its governance process.
Additional reporting by Brooke Masters in New York
