J P Morgan Chase Exits Net-Zero Banking Alliance

J P Morgan Chase, one of the major US banks, became the sixth largest financial institutions to join the growing list of top US banks, which have announced leaving the climate-focussed Net-Zero Banking Alliance (NZBA) since a month ago.

The other US banks, which quit NZBA are Citigroup, Bank of America, Goldman Sachs Group and Wells Fargo, which all left in December, while Morgan Stanley joined them last week. However, all these banks including J P Morgan said that they will continue to work independently in achieving net zero emission (NZE) targets.

With the latest exit, only three US banks – Amalgamated Bank, Areti Bank and Climate First Bank – are members of the NZBA. While Amalgamated is the 158^th largest bank by assets and Climate First is the 984^th according to the US FED, Areti is not even among the 2,151 banks with more than $300 million in combined assets at the end of September last year.

A spokesperson for J P Morgan Chase said that they will continue to work independently to advance the interests of the bank, its shareholders and clients and remain focused on pragmatic solutions to help further low-carbon technologies while advancing energy security.

“We will also continue to support the banking and investment needs of our clients who are engaged in energy transition and in decarbonising different sectors of the economy,” the spokesperson added.

According to NZBA website, the Alliance, which was launched in April 2021 with a current membership of 141 banks from 44 countries, is led by a group of global banks and convened by the United Nations and the member banks are committed to aligning their lending, investment and capital markets activities with net-zero greenhouse gas emissions by 2050.

To Avoid Political Pressures?

In a report by Bloomberg, which cited unnamed sources, attributed the group’s loss of other US member banks to avoid political pressure amid Republican attacks on “woke” finance and ahead of President-elect Donald Trump’s return to office.

The report also said that the banks that have left NZBA have said they will continue to support clients involved in the energy transition. At the same time, banks have increased their financing of fossil fuel-focused companies since the founding of the group in 2021, the report said.

According to media report, all of the recently defecting NZBA members were targeted by state Republican-led probes in the past few years.

Bank of America, Citi, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo were all probed by 14 Republican state Attorneys General about their membership in 2022 and 12 Republican heads of agriculture last year about their membership status in the group, the reports added.