Big Banks Don’t See Upside in Climate Promises Anymore

“UBS recognizes the NZBA’s valuable role in helping banks establish initial target-setting frameworks,” the bank said in a statement. “With that work advanced and with our in-house capabilities strengthened, we have decided to withdraw from the NZBA, like a number of our global peers.”

UBS was among the 43 banks that founded the group. Another was UK-based HSBC, which also withdrew earlier in July. Back in 2021, an HSBC spokesperson said the bank was “delighted” that the NZBA was formed. “A commitment to financing the transition to net zero is essential. It’s important that the banking sector is committed to providing the financial support needed to help customers on that transition.” Fast forward to last month, and just like UBS and “like many of our global peers, [we] have decided to withdraw from the NZBA.”

In the interim, not only has the Trump administration’s all-out assault on climate action and ambition put the fear of god in companies big and small, but many big banks had already started inching — or full-on sprinting — away from those hasty promises made just a few years ago. In February, HSBC pushed back its target date to cut its own operations’ emissions to net-zero — by 20 years. Instead of 2030, now 2050 is the goal; the end of this decade will see only a 40 percent reduction. A month later UBS did the same, albeit to a lesser degree, pushing its net-zero goal from 2025 to 2035. They bet on the winds pushing every boat in a certain direction in 2021, and got it wrong.

On August 1, another British giant, Barclays, joined the rats fleeing the fire. At this point, there’s no point in pretending: “With the departure of most of the global banks, the organisation no longer has the membership to support our transition,” they said in a statement.

Of course, American banks started this exodus. Between last December and the first weeks of January, the six biggest US-based banks — JP Morgan, Citi, Bank of America, Morgan Stanley, Wells Fargo, and Goldman Sachs, some of which were also founding NZBA members — all quit, obviously wanting to stay out of the incoming president’s crosshairs. Canadian institutions followed; in April, five of the six Japanese members were gone. “A few years ago, when climate change was at the front of the political agenda, the banks were keen to boast of their commitments to act on climate,” a Reclaim Finance analyst said back in January. “Now that the political pendulum has swung in the other direction, suddenly acting on climate does not seem so important for the Wall Street lenders.”

It echoes the backsliding by the original climate villains themselves, the oil companies. After a couple of years of pretending to embrace an energy transition, oil majors are by and large all the way back in on more exploration, more drilling, less renewables investment. The financial institutions aren’t digging up the dirty stuff themselves, but they play a huge role in maintaining the fossil fuel industry’s hold on the planet. They’ll need convincing to reverse course again.