Banks Celebrate the New Year by Quitting Their Climate Pledges

NZBA was part of the broader Glasgow Financial Alliance for Net-Zero, launched by former Bank of England governor turned green investment guru Mark Carney in 2021. In the lead-up to the U.N. climate talks in Glasgow that year, GFANZ was among a number of voluntary initiatives purportedly showing that momentum for climate action was sweeping corporate boardrooms. GFANZ, especially, boasted audacious numbers: $130 trillion “relentlessly, ruthlessly focused on net zero,” as Carney said at the time. (These figures were always a little funny. That $130 trillion figure referred to the total number of assets that groups that signed onto GFANZ commanded, not actual dollars committed to reducing emissions; much of that $130 trillion was still heavily invested in fossil fuels, with few concrete plans to change course.)

There were practical reasons these flashy, voluntary initiatives emerged when they did. In 2021, the U.K. presidency of the Glasgow climate talks, or COP26, was eager to throw some big numbers around as a sign of its success as a host. Then too, interest rates were low, and carbon-intensive companies—including oil and gas drillers—were hurting as demand limped back amid easing pandemic travel restrictions. So moving away from fossil fuels, however nominally, seemed less risky than it might have earlier as those firms struggled. Meanwhile, the new Biden administration and EU both promised ambitious climate action. Faced with the possibility of new emissions-reporting requirements or subsidies for green energy technologies being imposed in the near future, companies may have reasoned they could reap good P.R. from instituting some easier green policies voluntarily, like getting their books in order to track the carbon footprint of their investments, and investing in stuff that could make money.

Years later, those conditions have changed. Fossil fuel companies made record profits as demand soared back and the world sought to replace Russian oil and gas after Putin invaded Ukraine in early 2022. The Biden administration’s climate plans emphasized subsidizing low-carbon energy rather than penalizing fossil fuels, and the EU rolled back more ambitious plans along those lines as part of a renewed focus on “energy security,” including a building spree for liquefied natural gas import infrastructure. AI “hyperscalers” are also pledging to build fleets of energy-intensive data centers that—at least for a while—will require lots of fossil fuels. Trump’s reelection and the collapse of centrist governments in Europe that championed green investment plans may well be an opportunity for companies to more publicly embrace what they’ve done all along: try to make as much money as possible, whatever that means for the planet.