In response to growing pressure and overwhelming scientific consensus about the climate crisis, many of the world’s largest banks pledged a few years ago to reach net-zero financed emissions by 2050. Among those who have made this commitment are the six largest banks in the United States: JPMorgan Chase, Bank of America, Citi, Wells Fargo, Goldman Sachs, and Morgan Stanley.
While the banks’ long-term climate goals were important first steps, they are also entirely insufficient and represent the bare minimum for climate action and risk mitigation. What is most important now is the rapid, robust, and transparent implementation of those commitments.
A new Sierra Club report, released October 2024, analyzed the six major US banks' implementation of their net-zero commitments and shows that—despite some notable differences—all are significantly lagging on what's needed to demonstrate credible and transparent progress.
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The report examines current emissions targets and exclusion policies for the banks' financing of oil, gas and coal, as well as key climate-related disclosures, and contrasts those with summarized best practices for those categories. The report details recommendations for all the major banks in terms of immediate steps they can each take:
- Raise ambition of 2030 targets,
- Strengthen sectoral exclusion policies, and
- Improve transparency and comprehensiveness of disclosures.
The analysis provides an update and additional research to a similar report published by the Sierra Club in November 2022. Though the banks have published climate targets, policies, and disclosures across a range of sectors, the scope of the report is mainly focused on those practices for the fossil fuel sector, as the principal driver of the climate crisis and an outsized source of related financial risks. Details of banks’ targets in the following tables are sourced from publicly available bank publications, as of September 2024: Bank of America, Citibank, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo.
The near-term emissions targets and sectoral financing policies of the major US banks fall short of what is required to meet global climate goals. Furthermore, since making these commitments, the banks have largely remained complacent, failing to strengthen their targets or even going backward in some cases. For example, the report spotlights changes in the past year by Bank of America and JPMorgan Chase to policies and targets, respectively, that raise concerns about reduced ambition and transparency.
In addition to examining some of the banks’ targets and policies, the report also analyzes a selection of key climate-related disclosures, which include metrics on their emissions and approaches to the transition of high-emitting clients toward net zero. These disclosures are important for helping stakeholders understand the underlying assumptions, methodologies, and strategies that banks rely on to deliver on their climate commitments.
The report shows that, despite some exceptions, the major US banks have generally kept pace with one another with their policies, targets, and disclosures. Citi and Wells Fargo, for example, set themselves apart by being the only two majors to set absolute emissions reduction targets for the oil and gas sector. Citi, for its part, has the strongest exclusion policies for the coal sector among this group, though it too falls seriously short of the standards adopted by international banks. Additionally, Citi and JPMorgan Chase have gone beyond US peers with more transparent disclosures in some areas.
Some major banks around the world, in Europe and elsewhere, have far outpaced the US banks on these measures and continue to raise the bar for global best practices. While US banks should be understood as relative climate laggards on the world stage, it is nonetheless important to compare and contrast them on their own as peers and rivals that are supervised by the same federal regulators and engage with many of the same shareholders, clients, and other key stakeholders that are increasingly concerned about how big banks are handling their role in the climate crisis.
Ultimately, as the report describes, the most essential action that banks must take to reach their net-zero goals is to commit to ending support for the expansion of fossil fuel production. And yet, despite the targets, policies, and disclosures examined in the report, the top bankers of the biggest fossil fuel expansion companies are major US banks: Citi, JPMorgan Chase, and Bank of America — with Wells Fargo, Morgan Stanley, and Goldman Sachs also ranking high globally. All of them have serious improvements to make to demonstrate credible progress toward their net-zero by 2050 goals.