December 23, 2024 — Wells Fargo quietly exited the Net Zero Banking Alliance (NZBA), announcing the move on a Friday afternoon ahead of a holiday week with no explanation. Wells Fargo is now the second major U.S. bank to defect from the Alliance after Goldman Sachs withdrew its membership two weeks ago without citing a reason for its departure. Major U.S. banks first joined the NZBA in 2021 when it was politically expedient but have failed to curb their fossil fuel financing in line with delivering Net Zero emissions and a 1.5˚C pathway. So far, the Glasgow Financial Alliance for Net Zero and the United Nations Environment Programme Finance Initiative have lacked an adequate response to these members leaving.
Following a disappointing COP29 outcome and the rise of a second Trump administration, voluntary commitments are one of the last lines of defense against climate disaster but banks have been doubling down on fossil fuels. Wells Fargo has not named its role in causing the climate crisis, namely, that it has provided $296 billion dollars in fossil fuel investments since the Paris agreement. Of that, $99 billion was provided for the worst fossil fuel expanders, with $11 billion financed towards expansion in 2023 alone, according to Rainforest Action Network.
While it’s debated how important NZBA membership is to indicate a bank’s decarbonization efforts, any bank following Wells Fargo and Goldman Sachs in defecting from the alliance should be perceived as acting contrary to urgent climate action needed to confront this crisis.
“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,” said Allison Fajans-Turner, Bank Engagement and Policy Lead at Rainforest Action Network. “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.”
Other big banks have shown progress while retaining their NZBA membership. ING’s announced to end project financing for LNG export terminals, and moves by Crédit Agricole and BNP Paribas rule out involvement in bond deals for oil and gas companies. In September, Amalgamated Bank, Triodos Bank and Vancity, endorsed the Fossil Fuel Non-Proliferation Treaty Initiative. The NZBA should build upon its more ambitious members’ announcement to strengthen the credibility of the alliance.