Morgan Stanley on Thursday became the latest U.S. bank to withdraw from the Net-Zero Banking Alliance, just two days after some of its big-bank peers also left the climate-banking group.
The investment bank's exit marks the fifth such departure by a U.S. bank in less than four weeks. Goldman Sachs and Wells Fargo ended their association with the alliance earlier in December, while Bank of America and Citigroup said this week that they too would cut ties.
The exits come just weeks before President-elect Donald Trump takes office for the second time. Trump has talked about ramping up oil production while curbing subsidies for clean energy.
Morgan Stanley's departure leaves just four U.S. banks in the group, according to its website — JPMorgan Chase , the nation's largest bank by assets; Amalgamated Bank in New York City; Climate First Bank in Florida; and Areti Bank in Puerto Rico. In total, the group's website identifies 142 member banks from 44 different countries.
JPMorgan declined to comment Thursday on its future participation in the alliance.
Climate First CEO Ken LaRoe said in an email that the three-year-old bank with $858.1 million of assets "will continue to work closely" with the Net-Zero Banking Alliance. He also criticized the big banks for their exits, saying that their decisions "will cost investors, public pensioners, taxpayers and the world dearly."
Representatives of Amalgamated and Areti did not respond to a request for comment.
In 2021, Morgan Stanley, Bank of America and Citi were among the 43 banks that created the alliance in an effort to mobilize the private sector to align financing activities with the Paris climate accord. All participating banks pledged to shrink the carbon impact of their lending activities and to follow certain target-setting and reporting processes, such as establishing intermediary targets every five years.
The alliance did not comment Thursday following the news that Morgan Stanley, Bank of America and Citi have left the coalition, and it would not talk about efforts to bring more banks on board. But following Wells' departure, an alliance spokesperson said via email that while the group "prefers not to see any bank leave, [it] respects the decision Wells Fargo has made."
Several of the banks that have departed say they are still committed to decarbonization and reducing the impact of climate change. In a statement Thursday, a Morgan Stanley spokesperson said the company's "commitment to net-zero remains unchanged" and that it plans to continue to report its progress as it works toward its 2030 interim financed emissions goals.
"We aim to contribute to real-economy de-carbonization by providing our clients with the advice and capital required to transform business models and reduce carbon intensity," the Morgan Stanley spokesperson said.
Bank of America "will continue to work with clients on this issue and meet their needs" in relation to carbon neutrality, a company spokesperson said Thursday. Bank of America, as a company, achieved carbon neutrality in 2021 and now buys all of its electricity from renewable sources, according to the spokesperson.
Some banks, including Citi, say they are turning their focus to the Glasgow Financial Alliance for Net Zero, of which the Net-Zero Banking Alliance is a subgroup. The Glasgow Financial Alliance for Net Zero was also founded in 2021 and has a "principals group" that includes CEOs from 26 banks and other financial institutions. Citi CEO Jane Fraser is a member of the principals group.
In a statement Thursday, Citi said that it is focused on "addressing barriers to mobilizing capital to emerging markets in support of the low-carbon transition" and remains committed to achieving net-zero and being transparent about its own progress.
"In light of this shift, and Citi's progress towards its own net zero goals, we have decided to leave the Net-Zero Banking Alliance and focus our attention on supporting GFANZ during this new phase," the company said. "We will continue to work with our clients on their transitions to a low-carbon economy while helping ensure energy security, given the range of transition pathways that are being pursued across our global network."
Prior to the recent departures from the climate-banking group, the Sierra Club criticized the six largest U.S. banks that had committed to reaching net-zero emissions by 2050, saying in an October report that the banks had fallen behind in executing on their climate pledges.
JPMorgan, Bank of America, Citi, Wells, Goldman Sachs and Morgan Stanley are "significant laggards" on climate change policy compared with global best practices and European banks, and won't reach their 2050 targets, the Sierra Club said in the report.
Sierra Club representatives could not be reached Thursday for comment.
