In a quiet move that stirred concern among climate advocates, Wells Fargo withdrew from the Net Zero Banking Alliance (NZBA) without explanation. The decision was announced on a Friday afternoon, ahead of a holiday week, echoing a similar exit by Goldman Sachs just two weeks earlier. Despite initially joining the alliance in 2021 when it was politically advantageous, major U.S. banks have failed to align their fossil fuel financing with the goals of Net Zero emissions and a 1.5˚C climate pathway.
The Glasgow Financial Alliance for Net Zero (GFANZ) and the United Nations Environment Programme Finance Initiative, which oversee NZBA, have yet to issue a strong response to these defections. Critics argue that without accountability, the alliance risks losing credibility as an effective tool for climate action.
Wells Fargo’s departure from the alliance highlights a broader trend of banks backtracking on voluntary climate commitments while continuing to finance fossil fuel expansion. Since the 2015 Paris Agreement, Wells Fargo has financed $296 billion in fossil fuel projects, including $99 billion for companies driving expansion in the sector. In 2023 alone, the bank funneled $11 billion into fossil fuel projects, according to data from Rainforest Action Network (RAN).
Allison Fajans-Turner, Bank Engagement and Policy Lead at Rainforest Action Network opined that "Wells Fargo isn’t exactly proud of itself at this moment, or they’d do this on a Monday at 8am well after the holidays. But leaving the alliance will not absolve the bank of its fiduciary duty to manage climate risk responsibly. This is a critical moment for the alliance, and even in the face of defections, the world is counting on the NZBA to keep strong climate policies and have leaders in their alliance get the laggards to rise to the occasion."
Despite the exits, some banks have shown progress while maintaining NZBA membership. European banks, including ING, Crédit Agricole, and BNP Paribas, have taken steps to limit financing for fossil fuel projects. ING, for instance, pledged to end project financing for liquefied natural gas (LNG) export terminals, while Crédit Agricole and BNP Paribas committed to stopping their involvement in bond deals for oil and gas companies.
Furthermore, smaller banks such as Amalgamated Bank, Triodos Bank, and Vancity endorsed the Fossil Fuel Non-Proliferation Treaty Initiative, signaling their commitment to stronger climate action. Advocates are calling on NZBA to leverage these ambitious members to restore confidence in the alliance.
Just as 2024 drew to a close, Citibank and Bank of America also announced their withdrawal from NZBA, further undermining the alliance's efforts.
The departures coincide with reports that GFANZ may be scaling back its role, clarifying that it functions as an advisory body rather than an enforcement mechanism. Climate finance campaigners, including RAN, have urged the alliance to take a firmer stance on defections. "If US mega banks are unwilling to be bound by even the loose requirements of international voluntary associations then it is all the more imperative that national and state level governments get serious about regulating the banking sector. Otherwise, we all face the devastation of a bursting carbon bubble that has trillions of dollars in underpriced climate risk," Fajans-Turner warned.
With major U.S. banks retreating from their climate commitments, experts argue that regulatory intervention is necessary to curb fossil fuel financing. Without stricter oversight, the risk of a financial crisis caused by a bursting "carbon bubble" remains high, posing severe economic and environmental threats.
Advocates emphasize that voluntary alliances like NZBA still have a role to play, but only if members are held accountable. As climate risks escalate, the banking sector faces increasing pressure to align its actions with global climate goals.
