Morgan Stanley the latest US bank to flee climate coalition ahead of Trump return
A slew of US banks have exited a climate coalition in the days leading up to Donald Trump’s presidential inauguration.
Yesterday evening, Morgan Stanley became the latest US bank to depart from the Net Zero Banking Alliance, as pressure increasingly mounted on financial institutions from Republican lawmakers.
Despite leaving the alliance, Morgan Stanley said in a statement that the bank’s commitment to meeting its carbon targets “remains unchanged”.
Citigroup and Bank of America also left the group earlier this week, while Wells Fargo and Goldman Sachs departed earlier in December.
The UN-backed alliance, which includes over 140 banks with more than $70 trillion (£56.5 trillion) in assets, was founded in 2021 with the goal of bringing the financial sector into alignment with the Paris Climate Agreement.
It is an initiative of the Glasgow Financial Alliance for Net Zero, co-chaired by Michael Bloomberg and former Bank of England governor Mark Carney.
Other voluntary industry climate alliances, including the Net Zero Asset Managers Initiative, the now-disbanded Net Zero Insurance Alliance, and the Climate Action 100+ investor initiative have similarly seen exits from major industry players in recent years.
A large reason for the departure of many financial institutions from institutions like this has been pressure from right-wing lawmakers in the US to try and push banks away from sustainable investing.
The issue has been a thorn in the side of giant US asset managers such as Blackrock, who have faced condemnation and attacks from Republican politicians.
Last year, Blackrock was sued by the attorney general of Tennessee over its ESG policies, while it has been dropped from the public pension funds of multiple US states due to its support of sustainable investing.
In November, Scottish asset manager Baillie Gifford left both the Climate Action 100+ group and Net Zero Asset Managers initiative after it became embroiled in a months-long scandal over its sponsorship of literary festivals.
“Our membership has become contested, and this risks distracting from our core responsibilities,” a Baillie Gifford spokesperson told City PM at the time.
Despite fears that the departures may lead to a watering down of climate pledges, analysts explained that as regulatory burdens have grown on financial institutions to hire those with sustainability credentials, the need to be part of these groups has become less necessary.