Morgan Stanley quits Mark Carney-backed climate group

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Morgan Stanley & Co. LLC terminated its membership of a major climate-banking group, joining a wave of Wall Street firms that recently quit a global alliance intended to aid the reduction of greenhouse-gas emissions.

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Morgan Stanley is leaving the Net-Zero Banking Alliance (NZBA), the lender said on Thursday. Citigroup Inc. and Bank of America Corp. said earlier this week that they were doing the same.

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The defections are playing out against a tense political backdrop in the United States, as the country’s biggest financial firms find themselves the targets of Republican campaigns that have characterized net zero groups as climate cartels.

Such attacks have picked up, and as recently as November, Texas led a move to sue BlackRock Inc., Vanguard Group Inc. and State Street Corp. for allegedly breaching antitrust laws by using climate-friendly investment strategies to suppress the supply of coal. BlackRock said the suggestion that it invests in companies with the goal of harming them is baseless.

Other banks that have recently quit NZBA include Goldman Sachs Group Inc. and Wells Fargo & Co. All said they remain committed to their own net zero emissions goals and to helping clients reduce their carbon footprints.

“We will continue to report on our progress as we work towards our 2030 interim financed-emissions targets,” Morgan Stanley said by email.

Daniel Storey, a spokesperson for NZBA, declined to comment.

Morgan Stanley adjusted some of its green targets in 2024. Among these was a funding goal for plastics, with a report published in September omitting an earlier pledge to facilitate the prevention, removal or reduction of 50 million metric tonnes of plastic waste from the environment by 2030. The bank also has warned of the “unintended consequences” of withdrawing financing too quickly from high-carbon clients that plan to decarbonize.

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NZBA had been one of a number of finance-industry groups affiliated with the Glasgow Financial Alliance for Net Zero. GFANZ ended 2024 by adjusting the way it operates. Going forward, financial firms will be free to draw on GFANZ for guidance and assistance without being members of one of the sector alliances.

The defections that have hit NZBA follow similar exits across climate groups in other corners of the finance industry. In 2023, a coalition of insurers saw a mass exodus amid litigation threats. And in 2022, an equivalent group for asset managers parted ways with Vanguard Group, the world’s second-largest money manager. Other investment firms followed.

The Texas lawsuit against the three-biggest U.S. money managers referenced their participation in the Net Zero Asset Managers Initiative, which is another climate group associated with GFANZ.

GFANZ was formed more than three-and-a-half years ago in the run-up to the COP26 United Nations climate conference in Scotland. Back then, it had two aims: to raise the number of financial institutions committing to net zero, and to facilitate industry discussion on the challenges of the low-carbon transition.

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In an updated statement, GFANZ said it has “achieved its initial goal of developing the building blocks of a financial system capable of financing the transition to net zero.”

In order to “successfully transition the economy, we must accelerate progress in public policy and technology developments, and close three critical gaps: data, action, and investment,” the group said. GFANZ now plans to “turn its focus to closing the investment gap to help unlock the more than US$5 trillion a year opportunity created by countries modernizing their energy systems and putting economies onto a low-carbon path in the next decade,” it said.

(The NZBA is part of the Glasgow Financial Alliance for Net Zero, which is co-chaired by Mark Carney, who is chair of Bloomberg Inc. and a former Bank of England governor, and Michael R. Bloomberg, the founder of Bloomberg News parent Bloomberg LP.)

Bloomberg.com

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