Banks have an outsized influence on our lives. They control the flow of money generated by hundreds of millions of customers and are the gatekeepers for corporate financing. Their power and influence are critical to the transition away from fossil fuels to a carbon free future. 

“Financial institutions are the connector between everyday people and the energy system that gets financed for good or for bad,” explained Ben Cushing, campaign director of sustainable finance at the Sierra Club.

Recently, financial institutions have backed away from the commitment to a fossil-fuel-free economy. One after another, the six largest US banks—Goldman Sachs, JPMorgan, Wells Fargo, Citi, Morgan Stanley, and Bank of America—left the Net Zero Banking Alliance (NZBA), which was established to commit banks to invest sustainably. Then, on February 28, Wells Fargo went a step further. It announced that it would be abandoning its interim goal to reduce funding for fossil-fuel-emitting projects by 2030 as well as its goal to achieve net-zero emissions by 2050. The trend signals a reversal of the progress that has been achieved in recent years. 

The NZBA emerged in November 2021 at the 26th Conference of Parties in Glasgow as part of a larger grouping of 450 financial institutions, responsible for about $130 trillion in assets, that had voluntarily signed on to Glasgow Financial Alliance for Net Zero. It signaled a commitment by member institutions to develop voluntary targets that support a climate goal of 1.5°C above preindustrial levels. The formation was significant because it included the largest banks in the US, which have, since 2016, funded $1.8 trillion for fossil fuel projects. That’s a little less than a third provided by the 60 largest banks in the world during that period.

When the alliance was first announced, “there was a sense of hope that this could possibly be a breakthrough, as long as it was also followed up with accountability and more specifics,” Allison Fajanes-Turner, bank engagement and policy lead at Rainforest Action Network, said.  

In March 2023, when the alliance sought to impose stricter conditions for achieving net zero, US banks voiced concerns that domestic anti-ESG (Environmental, Social, and Governance) laws seeking to prevent corporations from acting on climate change would prevent their ability to meet those targets.

Donald Trump’s victory in last year’s presidential election signaled a decisive shift in the domestic political environment. Republican lawmakers recently brought a case against BlackRock and Vanguard for their membership in the Net Zero Asset Managers Initiative, which was also announced in Glasgow. Banks, too, may face similar legal backlash. Although these cases do not have solid legal grounding, the fear of being brought up for a hearing has caused a chilling effect, said Frances Sawyer, founder of Pleiades Strategy. 

Wells Fargo has now abandoned its net-zero-by-2050 goals as well as its interim goals to cut emissions by 2030. The other five major banks in the US still have those internal commitments, which according to Cushing are far more important for an institution than being part of an alliance. However, an accounting of these internal targets by the Sierra Club in October shows they are insufficient to meet global climate goals.

Studies continue to show that banks have done little in terms of weaning themselves off fossil fuels. The 2021 International Energy Agency report concluded that new fossil-fuel-supply projects are inconsistent with net-zero goals. The Banking on Climate Chaos report, an annual study coauthored by the Sierra Club and Rainforest Action Network among other partners, shows that banks have continued to pour money into new fossil fuel projects. As of March 2025, all major US banks earn more from loans and bonds linked to fossil fuels. According to the latest issue of the report, JPMorgan alone boosted its financing of fossil fuels to $40.8 billion. And it wasn’t alone: The 60 biggest banks committed a total of $705 billion to the fossil fuel industry in 2023. 

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Tony Burdon, CEO at Make My Money Matter, a UK climate finance campaign group, thinks banks made “fake promises.” What they got, according to Fajanes-Turner, in return for joining alliances and making voluntary pledges, is “a lot of praise from world leaders, the media, and the general public.... They have not shown enough commitment to following through on the promises they have made.”

With Wells Fargo reneging on its own commitments, “it's now hard for investors, shareholders, activists, or regulators to hold them accountable,” Fajanes-Turner said. 

Although the last few months have been a setback, there has been progress since 2021. The Net Zero Banking Alliance still has 134 members from 44 countries that hold $54 trillion in assets. The three remaining members from the US are Amalgamated Bank, Arreti Bank, and Climate First Bank. Sawyer also contends that there remains a growing recognition of the necessity of energy transition as well as the enormity of the effort it will require.

In the UK, Burdon’s campaign with Make My Money Matter has also achieved some wins. “Natwest and Lloyds, which are smaller banks, have actually reduced the amount of finance they're putting into fossil fuels,” he said. “They haven't done everything we want, but they've made a lot of progress, and that's been really very good to see.” Several green banks have also emerged that have no exposure to fossil fuels, he added. 

Nadia Ameli, a professor of climate finance at University College London, says that relying on banks to plan their own transitions may not be enough. Her modeling work on climate finance suggests stronger government regulations that limit a bank’s exposure to fossil fuels.

Despite the unfavorable political atmosphere in the US, Sawyer is convinced that stakeholders in the financial markets understand that a transition away from fossil fuels is inevitable. “The fact that these conversations are having to use coded language to be more private is not helpful, but the financial implications, both on the risk side and the opportunity side, are crystal clear. It is an inevitable transition,” she said.