'Laggards': Top 6 Wall Street Banks Failing on Net-Zero Climate Pledges
"Wall Street banks need to walk the walk, and their regulators, clients, and shareholders need to do more to hold them accountable."
Sierra Club on Wednesday issued a report showing that the United States' six largest banks lag behind in efforts to meet 2030 and 2050 climate emissions targets they've set, as they continue to pour billions of dollars into fossil fuel financing every year.
The 29-page report, Leaders or Laggards: Analyzing Major U.S. Banks' Net-Zero Commitments, assesses the progress of JPMorgan Chase, Citigroup, Bank of America, Wells Fargo, Goldman Sachs, and Morgan Stanley on efforts to meet 2030 targets, exclusion policies, and climate disclosure policies—the overall aim is to track their progress toward net-zero across their portfolios by 2050, which each has pledged to do.
"The role of major banks is critical for ensuring a sustainable and prosperous future," Ben Cushing, director of the Sierra Club's Fossil-Free Finance campaign, said in a statement.
"We cannot solve the climate crisis if they continue with business as usual," he added. "While the largest U.S. banks have committed to reaching net-zero emissions by 2050, they are evidently not yet on track to make it happen."
"Wall Street banks need to walk the walk, and their regulators, clients, and shareholders need to do more to hold them accountable," he concluded.
Major US banks @Chase @BankofAmerica @Citi @WellsFargo @GoldmanSachs @MorganStanley could actually make progress toward net-zero by:
1️⃣ Improving 2030 targets
2️⃣ Strengthening exclusion policies
3️⃣ Enhancing transparencyhttps://t.co/CcZzTCrGKi pic.twitter.com/PpPDXTApfQ
— Sierra Club (@SierraClub) October 9, 2024
The report's titular question is answered in the concluding section. "In general, the targets and exclusion policies of the major U.S. banks fall far behind international best practices and what is required in order to achieve their own climate commitments," it says.
"[They] have serious improvements to make in order to ensure their 2030 targets and financing policies are truly aligned with the goal of reaching net-zero by 2050," it also says.
The report provides detailed standards that banks must uphold if they want their net-zero policies to be "robust," and lays out examples of how each bank is failing to meet them.
The six banks are "relatively equal" in terms of their progress toward net zero, but there are some differences between them, the report says.
For example, only Citigroup and Wells Fargo have committed to reduce absolute emissions in the oil and gas sector—a key standard. The other four banks have merely set "emissions intensity" targets. Wells Fargo is the only one of the six to declare that its carbon accounting for 2030 won't include offsets or removal.
Bank of America, for its part, has backtracked on earlier climate pledges. Previously, the bank promised not to directly fund oil and gas drilling in the Arctic, but in December it announced it would simply apply "enhanced due diligence" to such projects.
One key standard that banks should employ is separating their emissions bookkeeping for lending and underwriting, the report says. Underwriting accounts for roughly half of banks' fossil fuel financing but is harder for the public to track than lending.
"Some banks limit their sectoral targets to cover lending, but exclude underwriting, creating a massive loophole through which billions of dollars can still be poured into heavily emitting sectors and projects," the report says.
In general, the report urges more standardization of climate accounting methods along with improved transparency and disclosure policies.
Four of the six banks are in fact in the top five on the list of global banks financing the fossil fuel industry since the Paris agreement was signed, according to the latest Banking on Climate Chaosreport, released in May. And when only financing for companies expanding oil and gas projects are considered, rather than just continuing to extract from existing reserves, the U.S. banks remain at the top.
"By far the most essential action that banks must take to reach their net-zero goals is to commit to ending support for expansion of fossil fuel production," the Sierra Club report says, citing Banking on Climate Chaos.
