Top American banks exit net zero alliance: What does this mean for their European peers?

Before Trump signed the order to exit the Paris Agreement, six of the biggest banks in North America pulled out of the Net Zero Banking Alliance (NZBA). 

Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Wells Fargo all announced that they would be leaving the coalition in December 2024 and early January. 

In late January, a number of Canadian banks followed their US counterparts. Five of the country’s top banks - TD Bank, Bank of Montreal, National Bank of Canada, Canadian Imperial Bank of Commerce and Scotiabank - also left the alliance. 

These departures have left many questions about the future of banking’s climate ambitions.  While 135 financial institutions remain in the alliance – including all of Europe’s major banks –  it’s unclear how it will now move forward. 

The NZBA is a group of leading global banks committed to aligning their lending, investment and capital markets activities with net-zero greenhouse gas emissions by 2050. 

Launched in 2021 with 43 founding members, NBZA was convened by the UN Environment Programme’s finance initiative but is led by the banks themselves. Citigroup, one of the major US banks to exit the alliance, was one of these founding members. 

Paddy McCully, senior analyst at NGO Reclaim Finance, says the spread of “Trumpism” – even before his reelection – is to blame. This hostile political climate has put particular pressure on US firms to leave the alliance, while Canadian institutions with widespread US presence are also vulnerable.

“State-level attorneys general have been launching various threats against banks and investors if they make any noise or indicate concerns about climate change, or suggest they might do anything about it,” he explains. 

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