Author: Klara Butz, Finance Campaigner at the Climate Reality Project Europe & Urgewald
In preparation for Trump's inauguration, major US banks have decided to leave the Net Zero Banking Alliance (NZBA). The NZBA is a voluntary initiative launched by the UN in 2021 with over 130 international member banks. From now on, the alliance will have to continue without the US banks JPMorgan Chase, Morgan Stanley, Citi, Bank of America, Wells Fargo and Goldman Sachs. Since the launch of the Alliance in 2021, these banks have financed the fossil industry to the tune of at least $595 billion. None of them were climate heroes to begin with, and the NZBA should not shed a tear for them. The alliance is smaller now, yes, but the loss of facetious members could allow for more ambitious targets for the remaining members.
It is, however, a disastrous sign for the future of the US financial industry. With Trump's inauguration, the US is entering a fossil fuel renaissance. His first day was marked by a flurry of declarations to increase fossil fuel production. This will cost a lot of money, and US banks are positioning themselves to take advantage. This is fatally short-sighted: The climate crisis will continue long after Trump's administration is gone. Investing in new fossil fuel projects will inevitably lead to stranded assets.
But US banks have an uncanny sense of timing. As they abandon the NZBA, they can also wave goodbye to their local offices in California as they collapse in the California wildfires. Leaving a climate alliance to fund more fossil fuels while the climate crisis unfolds before their eyes is adding fuel to the fire. Just a few days ago, Canadian banks also decided to leave the NZBA. While US banks fear political risks (Trump), Canadian banks seem to just jump on the bandwagon. Just a year ago, wildfires in Canada reminded them of their extremely high exposure to climate risks. Seems like Canadian banks collectively deleted that memory
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As the US spirals downward, all eyes will be on us in Europe. The European financial industry is a major player on the global stage, and we're laying the groundwork for global financial regulation. We must ensure that we do not follow the dark path of the US, but lead the way to a better future for all. Let's take Europe's banks by the hand and show them the way. This year, we’ll have the opportunity to do so as Climate Reality Leaders – as the first step, check our “Where does your money go” webinar hosted by our Branch featuring Heffa Schuecking, the Director of Urgewald, a climate nonprofit organization exposing financial links between financial institutions and fossil fuel companies. Click here to watch the webinar.
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