Goldman Sachs exits climate alliance for banks

Bloomberg News

Goldman Sachs Group is walking away from the world's biggest climate alliance for banks, in the latest sign that Wall Street is recalibrating its affiliation with such groups.

Goldman has decided to no longer be a member of the Net-Zero Banking Alliance, the company said in a statement on Friday.

Firms are struggling to adapt to a deluge of fragmented environmental, social and governance requirements from various standard-setters and jurisdictions. Goldman's decision to leave NZBA was largely motivated by a need to comply with mandatory reporting guidelines, according to a person familiar with the matter who asked not to be identified discussing internal deliberations at the bank. That will be helped by the rollout of the European Union's Corporate Sustainability Reporting Directive, the person said.

"We have the capabilities to achieve our goals and to support the sustainability objectives of our clients," the bank said in a statement. "Goldman Sachs is also very focused on the increasingly elevated sustainability standards and reporting requirements imposed by regulators around the world."

Goldman has been laying the groundwork for its departure from NZBA for a while now and clients and stakeholders have been consulted, the person familiar with the decision said.

A spokesperson for NZBA declined to comment. Members of the group commit to achieving net zero financed emissions by 2050 at the latest and to set interim five-year decarbonization targets.

The move comes amid intense pressure from the Republican Party on such coalitions, as part of a wider attack by the GOP on what it has characterized as "woke" capitalism. Last week, Texas Attorney General Ken Paxton led a move to sue BlackRock, Vanguard Group and State Street for allegedly breaching antitrust laws by using climate-friendly investment strategies to suppress the supply of coal.

That suit followed bans against ESG investing across numerous Republican states, with pressure expected to step up now that Donald Trump is headed for a second term in the White House.

Against that backdrop, banks and asset managers have scaled back their association with high-profile climate groups. In August, the asset management arm of Goldman said it had quit the world's biggest climate alliance for investors, known as Climate Action 100+. Other firms to have quit the alliance include the asset management arm of JPMorgan Chase & Co. and Pacific Investment Management Co.

And on Friday, Franklin Templeton said in a statement that it "won't renew its status" as a signatory with CA100+. The firm's decision was earlier reported by Responsible Investor.

CA100+, the world's largest investor group formed to fight climate change, had been helpful in providing early-stages support, but Franklin Templeton has now built enough internal expertise around climate investing to no longer require the assistance of the group, the company said in a statement. Two years ago, Franklin Templeton hired Anne Simpson, who was the first chair of CA100+, as its global head of sustainability.

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A separate climate alliance for insurers, NZIA, was gripped by an exodus last year, as firms responded to threats of antitrust litigation brought by Republican state attorneys general. And a net zero alliance for asset managers suffered a blow when Vanguard, the world's second-largest money manager, quit back in 2022.

Goldman said it has made "significant progress" in recent years on its net zero goals, "and we look forward to making further progress." That includes "expanding to additional sectors in the coming months," the firm said.

Goldman added that its priorities "remain to help our clients achieve their sustainability goals and to measure and report on our progress."

The NZBA is part of the Glasgow Financial Alliance for Net Zero, which is co-chaired by Mark Carney, the chair of Bloomberg Inc., and Michael R. Bloomberg, the founder of Bloomberg News parent Bloomberg LP.