Setbacks Are Not Defeats | The Compass (February 2025)
Net Zero Banking Alliance exodus & more in our February newsletter.
We kicked off the year with a major shake-up in the financial sector's climate commitments—JPMorgan became the latest major U.S. bank to withdraw from the United Nations-supported Net Zero Banking Alliance (NZBA). This move follows similar exits from Bank of America, Citigroup, Morgan Stanley, Goldman Sachs, and Wells Fargo. Shortly after, BlackRock withdrew from a parallel initiative for asset managers, the Net Zero Asset Managers Initiative.
The purpose of these alliances is for members to align their financial activities—lending, investing, and managing assets—with the goal of achieving net-zero greenhouse gas emissions by 2050. The recent departures suggest that, for many of these institutions, perhaps the short-term financial gains from fossil fuel-related investments outweigh the perceived long-term risks of climate change.
While we’ve previously discussed that decarbonization alone isn’t the silver bullet to solving our climate crisis, drastically reducing emissions remains an urgent imperative. There’s no sugarcoating it—these high-profile withdrawals are a concerning development. When the biggest players in the financial sector loosen their environmental commitments, it sets a precedent that can ripple across the industry. Given that the transition to a greener economy requires significant financing, this could slow our progress toward meaningful climate action and hinder the shift to clean energy.
So, what do we make of this, and where do we go from here? First: take a breath, it’s not all doom and gloom.
It’s important to recognize that these alliances, while ambitious, often serve more as symbolic gestures than binding commitments. They allow firms to project an image of sustainability without always having mechanisms for meaningful accountability or consequences for inaction. In that sense, their departure may not significantly alter the landscape, as progress often hinges on deeper, structural changes within these institutions rather than their membership in alliances.
Next, some banks that have exited the NZBA have pledged to continue funding clean energy projects—just outside the framework of this particular alliance. Many remain committed to other initiatives, such as the Glasgow Financial Alliance for Net Zero (GFANZ), and publicly assert their dedication to supporting clients through the transition to a low-carbon economy. Whether they follow through remains to be seen, but there is still room for cautious optimism.
Moreover, not all U.S. banks have abandoned the NZBA. Institutions like Amalgamated Bank, Climate First Bank, and Areti Bank remain in the NZBA, alongside a significant number of international banks that continue to push forward toward net-zero goals. While it would be ideal for the largest U.S. banks to lead the charge, progress can and will continue through collective effort from smaller financial institutions and global partners.
It's also crucial to remember that addressing climate change isn’t solely the responsibility of the financial sector. These banks wield significant influence, but they do not single-handedly determine our planet’s future. Climate action requires collective effort—across businesses, nonprofits, communities, families, and individuals. There are startups pioneering innovative business models in harmony with nature, financial institutions prioritizing climate risk assessments, investors backing sustainable companies, and everyday people making conscious choices—opting to compost, buy second-hand, carpool, and support businesses committed to sustainability. These efforts (still) matter. They all contribute to meaningful change.
Finally, while this moment may feel like a setback, history shows us that the pendulum tends to swing back. Progress is rarely linear, and temporary retreats should not be seen as permanent defeats. We must stay the course, refusing to let these challenges dampen the momentum that has been built. The work continues—and it’s more important now than ever.
With gratitude,
Jason W. Ingle
E hello@thirdnatureinvestments.com
in jwingle
P.S. Is there a topic, news story, or trend you’d like us to explore in an upcoming issue or blog? We’d love to hear from you, drop us a line at the email address above!
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