Bank Exits from NZBA Reveal the Inadequacy of Voluntary Industry Commitments – Regulation is Needed
Albany, NY—Environmental Advocates NY (EANY) is urging New York State to take decisive action to regulate the financial sector and ensure alignment with climate goals following the exit of two more of the U.S.’ largest banks from the Net-Zero Banking Alliance (NZBA), which aims to reduce carbon emissions to Net Zero by 2050.
On December 31, Citigroup and Bank of America announced they were exiting NZBA, following exits earlier in December by Wells Fargo and Goldman Sachs. The UN-backed alliance, which includes more than 140 banks holding more than $70 trillion in assets, was founded in 2021 with the goal of bringing the financial sector into alignment with the Paris Agreement and the 1.5°C global warming threshold set by scientists in order to mitigate the climate crisis.
“These exits reveal the inadequacy of voluntary commitments and underscore the urgent need for state-level leadership and regulation to protect state and national climate progress and economic stability,” said Vanessa Fajans-Turner, Executive Director of Environmental Advocates NY. “The banks won’t self-regulate, so New York must do it for them—or risk sticking taxpayers with yet another bailout. Each one of these banks has acknowledged that climate risk is real and will have major financial consequences.”
“As the global financial capital and home to Wall Street, New York has both the authority and responsibility to transform the financial system into a force for climate action,” continued Fajans-Turner. “By demanding accountability from banks and incentivizing renewable energy investments, New York can lead the nation in decarbonization while protecting taxpayers and building a shock-resilient future.”
The NZBA is an initiative of the UN-backed Glasgow Financial Alliance for Net Zero (GFANZ), co-chaired by former NYC Mayor Michael Bloomberg and Bank of England Governor Mark Carney. Other voluntary industry climate alliances, including the Net Zero Asset Managers Initiative, the now-disbanded Net Zero Insurance Alliance, and the Climate Action 100+ investor initiative have likewise seen the exits of major industry players over the last two years, as right-wing media figures and politicians have waged a campaign to undermine climate action by financial institutions and corporations.
EANY emphasizes that New York, as the global financial capital and home to Wall Street, must lead the charge in holding financial institutions accountable. This may include:
Mandating Scope 3 Emissions Disclosures & Reductions
Require financial institutions to achieve measurable financed emissions reductions, particularly across high-emitting sectors such as energy, industry, real estate, and transportation, to meet climate targets.
Establishing Rigorous Financing Conditions & Accountability
Impose strict requirements for lending, investing, and capital market activities to ensure alignment with climate goals. Banks must mandate credible emissions reduction plans, detailed transition pathways for borrowers, and robust oversight of financed projects.
Additionally, require financial institutions to assess clients’ human rights records and transition readiness.
Develop time-bound plans for reducing or terminating financing for clients that fail to make meaningful progress toward emissions reductions and climate alignment.
Enforcing Exclusionary Policies
Phase out financing for companies engaged in fossil fuel expansion or other high-carbon activities. Prohibit funding for new fossil fuel projects and ensure all investments align with long-term climate resilience objectives.
Incentivizing Renewable Energy Investments
Create and expand state-level incentives that make renewable energy projects more attractive and economically viable than fossil fuel alternatives. Use tax benefits and public-private partnerships to ensure financial institutions prioritize sustainable investments.
Requiring Lobbying Disclosures
Mandate public disclosure of financial institutions’ lobbying activities, particularly those related to climate policies, to ensure transparency and alignment with stated climate commitments.
New York’s position as home to the largest financial institutions provides an unparalleled opportunity to set a national standard for integrating climate realities into financial systems. EANY is currently collaborating with elected officials and partners to advance legislation that mandates climate risk and Scopes 1 through 3 emissions disclosures, driving greater accountability in the financial sector.
About EANY
Environmental Advocates NY is New York’s leading state-focused environmental advocacy organization, dedicated to protecting the environment and public health. EANY works to hold decision-makers accountable and advance policies that mitigate climate change, reduce pollution, and ensure a sustainable future for all.
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