Sierra Club responds to US banks' threats to leave global net-zero alliance

Media outlets reported today that major US banks including JPMorgan Chase, Bank of America, and Morgan Stanley are threatening to leave the Glasgow Financial Alliance for Net Zero (GFANZ) over concerns that updated criteria around financing of new fossil fuel projects may make the banks vulnerable to legal challenges from fossil fuel-aligned politicians.

The Sierra Club's Fossil-Free Finance campaign director Ben Cushing issued the following statement in response to the news:

"It is unsurprising that dirty energy lobbyists and their political allies are cynically threatening legal action against banks who take climate change seriously. But these threats should be seen for what they are: bad faith attacks that are simply the latest form of climate denialism.

The science is clear, and it hasn't changed: The only way to prevent runaway climate change is to stop financing new fossil fuel expansion. All six major US banks -- including the very banks considering leaving this global alliance -- have already announced their own commitments to achieve net-zero emissions. In order to do this, these banks will each ultimately need to take the steps that the science demands -- regardless of their membership in voluntary climate initiatives."

BACKGROUND

The Glasgow Financial Alliance for Net Zero (GFANZ) includes the Net Zero Banking Alliance (NZBA), which is a member of the Race to Zero campaign, a UN-backed global campaign rallying non-state actors to take rigorous and immediate action to halve global emissions within this decade. All six major US banks--Citibank, JPMorgan Chase, Bank of America, Wells Fargo, Morgan Stanley, and Goldman Sachs--have been members of NZBA since 2021.

In June, Race To Zero released an updated set of criteria for its members, calling for the phaseout of all unabated fossil fuels as part of a just transition. The accompanying interpretation guide said that members of the initiative--including the investors, banks, and insurers who are part of GFANZ--must restrict the development, financing, and facilitation of new fossil fuel assets, including no new coal projects. But as of last week, Race To Zero updated its interpretation guide to clarify its guidance on new investments in fossil fuels, nominally granting members more flexibility in implementing their climate transition plans.

Last week, the Sierra Club and a global coalition of advocacy organizations sent a letter to the UN Environment Programme Finance Initiative (UNEP-FI) and the Net Zero Banking Alliance (NZBA) steering committee, asking the alliance to specify plans for complying with the new Race to Zero criteria.

According to Race to Zero, all existing members and partner organizations will be required to meet the criteria by June 15, 2023, at the latest. In the meantime, Race to Zero stated it will shift its focus to the implementation and accountability of net-zero commitments for the organizations that have made them.