Membership groups centered around climate commitments and net-zero goals have had a rocky few months leading up to and through the U.S. presidential inauguration. 

Some banks and financial institutions had already announced their departures from climate alliances in the wake of ongoing scrutiny from the Republican Party. But much of Wall Street’s exodus took place after November, when President Donald Trump secured a second term in the White House.

The exits align with what experts warned would follow in the aftermath of Trump’s victory. Tom Kuh, Morningstar Indexes’ head of ESG strategy, told ESG Dive a Trump administration would be “antagonistic” to the interests of ESG investors.

Trump’s reelection is also “likely to have significant impacts on regulation of investors’ consideration of environmental and social factors,” Heidi Welsh, Sustainable Investments Institute’s executive director, said after the results were announced.

On his very first day in office, Trump signed a flurry of executive orders that signaled reversal on the nation’s federal climate policy, including orders to withdraw the U.S. from the Paris Agreement, again; declare a national “energy emergency;” and pause all wind power development.

In the wake of the change in federal government leadership, climate alliance withdrawals from notable Wall Street banks have come in waves, and it is less clear what these departures bode for the future of voluntary climate alliances and corporate net-zero goals.

A timeline of member exits

Following November’s presidential election results, Goldman Sachs announced it had quit the United Nations-backed Net-Zero Banking Alliance, a sector coalition whose members have committed to aligning their financial activities with the aim of reaching net-zero emissions by 2050.

The bank did not provide an explicit reason for its exit, though it told ESG Dive it remained committed to its climate targets. “We have the capabilities to achieve our goals and to support the sustainability objectives of our clients,” a Goldman spokesperson said in December.

Goldman’s exit set off a wave of U.S. departures. Wells Fargo, Bank of America and Citi followed suit before the end of the calendar year, while Morgan Stanley and JPMorgan Chase announced they were also leaving NZBA on Jan. 2 and Jan. 7, respectively. The last departures came just weeks before Trump’s inauguration, where he returned with a Republican majority in both the House and Senate in tow.

“The departure of major banks from the Net-Zero Banking Alliance is a deeply disappointing signal that undermines the global fight against the climate crisis,” Carsten Brinkschulte, CEO of Dryad Networks — which provides AI-powered solutions for early wildfire detection — told ESG Dive in emailed comments. 

“These actions highlight how short-term political pressures and culture wars are taking precedence over long-term, unified solutions that are critical to safeguarding our planet,” Brinkschulte said.

The NZBA departures didn’t happen in isolation, either. BlackRock, the world’s largest asset manager by AUM, recently pulled out of the Net-Zero Asset Managers initiative, another U.N.-backed group whose signatories commit to reaching net-zero alignment by 2050 or sooner. 

At the time, BlackRock Vice Chair Phillipp Hildebrand and Helen Lees-Jones, the company’s global head of sustainable and transition solutions, said the asset manager’s membership in NZAM was creating confusion around the firm’s practices and left the firm subject “to legal inquiries from various public officials,” according to a reported Jan. 9 letter sent to clients.

NZAM announced an operational pause on Jan. 13, days after BlackRocks’s exit. The group said it was suspending all activities to track its signatories’ reporting and implement their commitments as it undergoes a review of the program. NZAM said its voluntary initiative suspension and review were triggered by “recent developments in the U.S. and different regulatory and client expectations.”

NZAM still had commitments from 325 asset managers, including JPMorgan Asset Management, State Street and Franklin Templeton Investments at the time of the announcement. However, its website does not currently display any signatories; the list has been replaced by a statement announcing the pause.

Northern Trust Asset Management confirmed to ESG Dive this month that it had departed the Net-Zero Asset Managers initiative and Climate Action 100+, an investor group that saw its fair share of member withdrawals last year. 

CA100+ focuses on engaging companies to improve their climate change governance, slash emissions and strengthen climate-related financial disclosures to “create long-term shareholder value,” according to its website. Ongoing scrutiny from House Republicans caused several of its members to exit the group last year.

JPMorgan Asset Management, State Street Global Advisors, Invesco, Pimco, Goldman Sachs’ asset management arm and subsidiaries of Franklin Templeton and Sun Life Financial all left CA100+ last year, prior to the NZBA and NZAM exodus. Meanwhile, BlackRock downgraded its membership to a smaller international arm.

What’s driving the withdrawals?

Banks and their sustainability goals have been the target of several state and federal GOP-initiated probes in the past few years.

All of the six recently defected NZBA members — Bank of America, Citi, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo — were subject to separate probes initiated by 14 Republican state attorneys general and 12 Republican heads of agriculture in the past two years.

After their departures from NZBA, Texas Attorney General Ken Paxton said he would end his ongoing probe of major U.S. banks and allow them to conduct business in the Lone Star State following their recent departures from NZBA. Paxton had previously criticized the group for having “unlawful ESG commitments.” Paxton’s probe targeted Bank of America, Morgan Stanley, JPMorgan Chase and Wells Fargo — which have now all left NZBA — in addition to Barclays, Fidelity and State Street, among others.

Separately, members of CA100+ have faced a whirlwind of investigations from House Republicans over their alleged use of environmental, social and governance factors in investment decisions.

In August, the House Judiciary Committee sent letters to more than 130 U.S.-based Climate Action 100+ members, including companies, retirement systems and government pension, questioning their involvement in the group. The letters were part of the committee’s years-long probe into whether antitrust laws currently serve “to deter anticompetitive collusion to promote ESG-related goals.”

A December report from the committee found that over 70 investors have left CA100+ in the years since Republicans on the committee have investigated the group. Investors attributed the departures to reasons that include “obligations under antitrust and competition laws,” according to the report.

Trump’s return to the White House, along with Republican House and Senate majorities, has created an overall atmosphere of fear and uncertainty that most financial institutions want to steer away from, according to experts.

“We have a president that is willing to be very bold in action,” Arvin Vohra, CEO of Redaptive — an energy-as-a-service provider that finances and installs energy saving and energy generating equipment — told ESG Dive in an interview.

When comparing Trump’s second departure from the Paris Agreement to his first, Vohra noted that the major difference he noticed was that most corporations — including the Fortune 500 companies Redaptive calls clients — had opted to stay quiet.

“Companies don’t want to step in the way of [Trump’s] agenda … they don’t want to jump in front of that freight train,” Vohra said.

Brinkschulte told ESG Dive that the wave of exits could also be attributed to a more of a “psychological lemmings movement,” where financial institutions are simply following what their peers are doing.

The Dryad Networks CEO said that it’s possible banks initially “supported these organizations because they felt it was ‘en vogue’ to do,” but no longer feel that is the status quo and are, hence, “reducing their efforts and costs.”

Some sustainability advocates, however, have been less sympathetic about the regulatory pressure banks may be facing under the new Trump administration.

“These exits make it abundantly clear that U.S. banks will not police themselves and will readily capitulate to the pressure tactics and climate denialism of a Republican-controlled federal government,” Allison Fajans-Turner, bank engagement and policy lead at environmental nonprofit Rainforest Action Network, said in emailed comments to ESG Dive this month.

Do banks still care about sustainability?

Almost all of the banks that recently quit climate alliances and membership groups said they remained committed to their sustainability goals, though none of them provided an explicit reason for leaving.

Vohra said that “geopolitical positioning aside,” Redaptive’s business — which helps companies meet their corporate sustainability initiatives by reducing energy waste and carbon emissions — had not been impacted by the increased scrutiny of ESG and climate issues. Vohra said, in fact, Redaptive’s “pipeline is booming” because most of the company’s clients see sustainability as “economic” and something that “still makes sense to do.”

The only difference now though, according to Vohra, is that companies want to achieve their sustainability commitments by creating as little noise as possible.

“Companies like Redaptive are just doing business in peace and quiet and not really dealing with [Washington] D.C.” he said.

At the time of its exit from NZBA, Citi told ESG Dive it remained committed to its own net-zero goals and would center its attention on “addressing barriers to mobilizing capital to emerging markets in support of the low-carbon transition.” Citi also said it would continue to support the Glasgow Financial Alliance for Net Zero — a U.N.-backed umbrella group of climate-focused financial sector coalitions, which includes NZBA — despite its departure from the coalition.

A BofA spokesperson said the financial institution would “continue to work with clients on this issue and meet their needs,” and would also maintain its involvement in GFANZ.

Morgan Stanley, like its peers, said its “commitment to net-zero remains unchanged.”

“We aim to contribute to real-economy decarbonization by providing our clients with the advice and capital required to transform business models and reduce carbon intensity,” a spokesperson from the New York City-based investment bank told ESG Dive in January.

Despite Northern Trust AM’s recent climate group departures, the asset manager said it would “continue to make investments that support [its] independent stewardship and sustainable investing capabilities.”

A Jan. 24 open letter from global investment firm Calamos Investments echoed statements the banks have made in the wake of the departures.

“These banks’ withdrawals from the alliance do not necessarily mean corporations are abandoning sustainability even if they step away from high-profile committees and organizations,” Calamos’ sustainable investing team wrote.

Vohra said “multiple banks that had exited are clients of Redaptive” and doing business with the company. “They're looking at cutting emissions in a way that can improve their client experience,” he added. Vohra did not specify which banks rendered services from Redaptive.

“Banks are still committing to ESG,” he said. “They’re committing to sustainability products, albeit they’re not committing to [climate] alliances, and whatever those alliances’ membership criteria are.”