NEW REPORT: Sierra Club Finds Major US Banks Are Climate Laggards, Recommends Steps to Meet Net-Zero Commitments

A new report released today, Leaders or Laggards: Analyzing major US banks’ net-zero commitments, from the Sierra Club finds that all six major US banks — JPMorgan Chase, Bank of America, Citi, Wells Fargo, Goldman Sachs, and Morgan Stanley — are falling short in implementing best practices for interim emissions targets, exclusion policies, and disclosures to demonstrate alignment with their commitments to net-zero emissions by 2050. The report highlights key standards and concerns for banks’ practices across these areas, and despite some of the banks’ progress relative to US peers, they all lag far behind expectations for global leaders.

“The role of major banks is critical for ensuring a sustainable and prosperous future. We cannot solve the climate crisis if they continue with business as usual. While the largest US banks have committed to reaching net-zero emissions by 2050, they are evidently not yet on track to make it happen,” said Ben Cushing, Fossil-Free Finance Campaign Director at the Sierra Club. “Stronger action is urgently needed, including improvements to US banks’ climate targets, policies, and disclosures — and ultimately an end to their financing of fossil fuel expansion. Wall Street banks need to walk the walk, and their regulators, clients, and shareholders need to do more to hold them accountable.”

While banks’ long-term climate goals are laudable, 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.

The report aims to capture key elements of that implementation by examining the near-term emissions targets, exclusion policies, and climate-related disclosures of the six major US banks, as of this publication date. 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.

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. 

Despite some relative bright spots, across the board, all six major US banks are significant laggards when compared to global best practices and international counterparts. The major US banks have serious improvements to make to demonstrate credible progress toward their net-zero by 2050 goals. Recommendations in the report include:

• Improving 2030 targets by expanding sectoral emissions targets beyond lending to cover underwriting and focusing on absolute emissions reductions aligned with a 1.5°C pathway. 
• Strengthening exclusion policies to exclude corporate-level financing for companies expanding fossil fuels. 
• Enhancing transparency by ensuring banks provide more comprehensive disclosures of their emissions and transition plans to back up commitments.

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.

Learn more about how banks can make greater progress toward net-zero in the report.