Feb 6, 2023
Wall Street’s CO2 Agenda Drives Green Bank to Quit Alliance
(Bloomberg) -- One of Germany’s greenest banks has quit the world’s biggest climate-finance alliance in protest, citing concerns that Wall Street is preventing the group from achieving its stated goal.
GLS Bank, a founding member of the Net-Zero Banking Alliance, said it no longer wants to be part of the group as much bigger signatories in the US still support oil, gas and coal projects in emerging markets.
“It has come to our attention that some large NZBA member banks continue to finance new fossil-fuel infrastructure projects on the African continent,” Nora Schareika, a spokeswoman for GLS, said in an emailed response to questions. GLS, which became the first bank to exit NZBA when it made the decision in January, didn’t identify any Wall Street banks by name.
A spokeswoman for NZBA said the group doesn’t comment on individual exits. That said, it is “inevitable over time that individual members may, for a variety of reasons, decide to leave,” she said.
NZBA, which is a subgroup of the Glasgow Financial Alliance for Net Zero, was created to get the banking industry aligned with the goal of preventing global warming from exceeding the critical threshold of 1.5C. But the combination of an energy crisis fueled by war and an increasingly difficult political environment in the US has made that goal harder to reach.
Against that backdrop, several Wall Street banks fought efforts last year that would have imposed binding fossil-finance restrictions on NZBA members. JPMorgan Chase & Co., Morgan Stanley and Bank of America Corp. even threatened to leave the alliance if such limits were enforced, people familiar with the process said at the time. The pushback from banks resulted in GFANZ loosening ties with Race to Zero, which is the United Nations-backed group that was behind the proposed restrictions.
The upshot is that “a significant proportion of NZBA members continue to lack an appropriate approach to their own climate and environmental impact,” said Schareika of GLS, which has about $10 billion of assets.
NZBA members formally commit to align their lending and investment portfolios with having net-zero emissions by 2050 and they also set intermediate science-based decarbonization targets for 2030 or sooner. The group “seeks to drive ambition among its members,” encouraging them to “rely on the most recent and robust science” in developing net-zero targets that align with no or low-overshoot 1.5C transition pathways, the NZBA spokeswoman said.
A study published last month by Reclaim Finance found that companies inside NZBA have arranged at least $269 billion of loans for oil, gas and coal companies that are expanding their business since the banking coalition was created in April 2021.
The biggest firm to quit GFANZ to date is US fund manager Vanguard Group, which left late last year.
Read more: Citi, BofA Lead Wall Street Banks Funding Fossil-Fuel Expansion
(Michael Bloomberg, founder of Bloomberg News parent Bloomberg LP, is co-chair of GFANZ .)
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