Morgan Stanley Joins Wall Street Exodus from Net-Zero Banking Alliance
Morgan Stanley (NYSE: MS) has become the latest financial giant to abandon the Net-Zero Banking Alliance, a UN-backed coalition aimed at aligning banks’ financing activities with global net-zero emissions targets. The move follows recent exits by Citigroup (NYSE: C) and Bank of America (NYSE: BAC), and earlier departures by Goldman Sachs Group (NYSE: GS) and Wells Fargo (NYSE: WFC), marking a significant retreat from collective climate commitments by some of the world’s largest banks.
These high-profile defections, driven by intensifying political and market pressures, cast doubt on the ability of voluntary financial coalitions to sustain ambitious climate action in a polarized environment.
Launched in 2021, the NZBA aimed to transform the financial sector’s role in combating climate change. As part of the broader Glasgow Financial Alliance for Net Zero, it united over 140 banks across 44 countries, with members committing to reduce greenhouse gas emissions linked to their financing activities and to achieve net-zero emissions by 2050.
NZBA members pledged to set interim 2030 emissions targets for high-impact sectors, including energy, transportation, and heavy industry, aligning their portfolios with the 1.5°C warming limit set by the Paris Agreement.
Morgan Stanley’s departure is the latest in a series of exits that have rocked the NZBA. In December 2024, Goldman Sachs and Wells Fargo began the exodus, followed shortly by Citigroup and Bank of America. Citi, a founding member of the NZBA, justified its decision by citing a strategic shift within GFANZ to prioritize mobilizing capital for low-carbon transitions in emerging markets.
“In light of this shift, and Citi’s progress towards its own net-zero goals, we have decided to leave the Net-Zero Banking Alliance and focus our attention on supporting GFANZ during this new phase,” the bank said in a statement.
Bank of America echoed a similar sentiment, reaffirming its commitment to achieving net-zero emissions across its financing, operations, and supply chain by 2050 but opting to pursue its goals independently of the NZBA.
Morgan Stanley’s decision to exit the NZBA represents a turning point in the unraveling of climate finance alliances. Although the bank has not publicly detailed its reasoning, industry analysts point to growing political pressures in the United States as a key factor.
The financial sector has faced a wave of backlash from Republican lawmakers, who argue that ESG initiatives infringe on free-market principles and disadvantage traditional energy industries. In some states, officials have threatened legal action or pledged to sever financial ties with institutions involved in climate-focused coalitions.
This anti-ESG campaign has placed multinational banks like Morgan Stanley in a precarious position, particularly as they navigate competing demands from regulators, investors, and political stakeholders.
The NZBA’s fragmentation raises serious questions about the feasibility of voluntary coalitions to drive systemic change in the financial sector. Without the accountability and shared resources provided by alliances like the NZBA, experts warn that individual institutions may struggle to maintain momentum on climate goals.
Despite their exits, banks like Morgan Stanley, Citi, and Bank of America have reaffirmed their climate goals. However, critics remain skeptical about whether these institutions can achieve the same level of ambition outside the NZBA framework.
Information for this briefing was found via ESG Today and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
