by As Donald J. Trump’s second presidency begins, America’s largest banks and asset managers have abandoned one of the most overt symbols of their commitment to achieving green goals: climate action networks.
In the month leading up to Trump’s inauguration on Monday, the six largest US banks, including JPMorgan and Goldman Sachs, left their Net Zero Banking Alliance, while BlackRock, the world’s largest asset manager, quit a similar initiative. And on Friday, the Federal Reserve withdrew from a network of regulators studying the risk of climate change.
The exodus comes after years of growing political and legal pressure to set aside environmental, social and governance goals. The climate groups, which promoted targets for cutting carbon emissions and financing the transition to the green economy, had drawn the ire of some Republican lawmakers.
Mr. Trump has also taken aim at the administration’s efforts to pursue climate change policies.
“The political climate has changed radically,” said Shivaram Rajgopal, a professor at Columbia Business School. “If you’re the CEO of one of these big banks, if you stay in one of these alliances, you’re just exposing yourself to the risk of lawsuits. It’s like having a bull’s-eye on your back.”
The departures follow a pattern of steps taken by business leaders to avoid a clash with the Trump administration. This month, the social media giant Meta ended its fact-checking program and added an ally of Mr. Trump to its board.
Less than four years ago, banks, asset managers and insurers were clamoring to show off their green credentials by joining global initiatives aimed at accelerating climate action. At COP26, the 2021 United Nations Climate Summit, the Glasgow Financial Alliance for Net Zero was introduced to bring together companies that collectively managed $130 trillion in assets. It became an umbrella group for net-zero alliances with requirements that were not too strict to allow as many members as possible.
For some companies, especially in Europe, the rules were too relaxed, causing tensions within the groups. At the same time, opposition in the United States to initiatives that took into account a company’s environmental and social practices intensified. In November, BlackRock and two other major asset managers were sued by Texas and 10 other Republican-led states for “anti-competitive practices” and accused of conspiring to use net-zero groups to limit coal production and drive up electricity prices.
Before their departure, some financial executives had already softened their language on climate targets and shifted focus to energy security, which implicitly meant relying on fossil fuels for longer. But abandoning these groups has been the biggest concession to calls for an end to so-called woke capitalism, or policies that harm the oil and gas industry. Last year, the net zero alliance for insurers dissolved after losing about half its members, and Climate Action 100+, an investor group, has suffered the departure of prominent members.
The Net Zero Banking Alliance has lost the largest US banks, but still has more than 130 members, the majority of which are European banks. On Friday, Canada’s four largest banks also left the alliance.
BlackRock left the Net Zero Asset Managers initiative this month because its membership had “caused confusion” and led to “legal investigations” from government officials, BlackRock executives said in a letter to clients seen by The New York Times. The asset manager said leaving the group would not change the way it managed portfolios or developed investment products, including for clients who had sustainability and net zero carbon targets.
JPMorgan, Bank of America, Citigroup and Goldman Sachs said in statements they would continue to support clients toward their sustainability goals. The CEOs of Bank of America and Citigroup are also still part of the Glasgow Alliance, the umbrella group, which changed its rules so that companies could stay involved without being members of target groups.
“This change reflects the progress made to date, the spread of climate regulation and the need to mobilize more capital to developing countries,” a spokesperson for the alliance in Glasgow said in a statement.
Whether or not the banks are in these alliances is unlikely to make much meaningful difference in their drive for climate action, said Professor Rajgopal, backed by some research.
“It was a jamboree, it was a festival,” he said, but the behavior of banks and other business leaders never changed.
The departure widens the gap with Europe, where companies are being forced to adopt stricter climate targets and increase disclosure of climate risks. Major U.S. banks and money managers still must meet requirements in Europe, where they have a substantial customer base. BlackRock said its largest clients in Europe all had net zero targets.
“It is extremely disappointing to see these anomalies,” said James Alexander, CEO of the UK Sustainable Investment and Finance Association, especially in light of the Los Angeles bushfires and the crossing of a dangerous global warming threshold.
“Our hope is that they will continue to do this work at the pace and scale that the science requires,” he said.
