As the second presidency of Donald J. Trump begins, America’s largest banks and asset managers have abandoned one of the most overt symbols of their commitment to reaching green goals: climate action networks.
In the month leading up to Mr. Trump’s inauguration on Monday, the six largest U.S. 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 that studied climate change risk.
The exodus comes after years of growing political and legal pressure to ditch environmental, social and governance goals. The climate groups, which encouraged targets for reducing 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 government efforts to pursue climate change policies.
“The political environment has radically changed,” said Shivaram Rajgopal, a professor at Columbia Business School. “If you are the C.E.O. of one of these large banks, if you stay in one of these alliances, you’re just opening yourself up to litigation risk. It’s like you have a bull’s-eye on your back.”
The departures follow a pattern of steps taken by business leaders to avoid collision with the Trump administration. This month, the social media giant Meta ended its fact-checking program and added an ally of Mr. Trump’s to its board.
Less than four years ago, banks, asset managers and insurers clamored to show off their green credentials, joining global initiatives that sought to speed up climate action. At COP26, the United Nations climate summit in 2021, the Glasgow Financial Alliance for Net Zero was introduced to bring together firms that collectively controlled $130 trillion in assets. It became an umbrella group for net zero alliances with requirements that were not too stringent to allow as many members as possible.
For some firms, particularly in Europe, the rules were too loose, which created tensions within the groups. At the same time, the backlash in the United States against initiatives that took into account a company’s environmental and social practices grew more intense. In November, BlackRock and two other large asset managers were sued by Texas and 10 other Republican-led states for “anticompetitive practices” and accused of conspiring to use the net zero groups to restrict coal production and push up electricity prices.
Before their exits, some financial executives had already softened their language on climate goals, shifting the focus to energy security, which implicitly meant relying on fossil fuels for longer. But quitting these groups has been the biggest concession to calls to end so-called woke capitalism, or policies that hurt the oil and gas industry. Last year, the net zero alliance for insurers disbanded after losing about half its members, and Climate Action 100+, a group for investors, has suffered departures of prominent members.
The Net Zero Banking Alliance lost the largest U.S. banks, but it still has more than 130 members, the majority of them European banks. On Friday, Canada’s four largest banks also quit the alliance.
BlackRock left the Net Zero Asset Managers initiative this month because membership had “caused confusion” and led to “legal inquiries” from public officials, BlackRock executives said in a letter to clients that was seen by The New York Times. The asset manager said quitting the group would not change how it managed portfolios or developed investment products, including for clients who had sustainable and net zero carbon emission goals.
JPMorgan, Bank of America, Citigroup and Goldman Sachs said in statements that they would continue to support clients toward their sustainability goals. The chief executives of Bank of America and Citigroup are also still part of the Glasgow alliance, the umbrella group, which changed its rules so that firms could stay involved without being members of target-setting groups.
“This change reflects the progress delivered to date, the spread of climate regulation, and the need to mobilize more capital to developing nations,” a spokesman for Glasgow alliance said in a statement.
Whether or not the banks are in these alliances is unlikely to make much meaningful difference to their pursuit of climate action, said Professor Rajgopal, which some research has supported.
“It was a jamboree, it was a festival,” he said, but the behavior of banks and other business leaders never changed.
The departures widen the chasm with Europe, where companies are pushed to adopt stricter climate targets and increase disclosures of climate risks. Large American banks and money managers still have to meet the demands in Europe, where they have substantial client bases. BlackRock said that its largest clients in Europe all had net zero targets.
“It’s extremely disappointing to see these departures,” said James Alexander, chief executive of the U.K. Sustainable Investment and Finance Association, especially in light of the wildfires in Los Angeles and as a dangerous global warming threshold was breached.
“Our hope is that they will continue to undertake this work at the pace and scale the science demands,” he said.
