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24 Jan 2025

Financial Institutions

Future of green finance when US banks exit the Net Zero Banking Alliance (Current Issue No.3550)

คะแนนเฉลี่ย
  • Several US banks announced their withdrawal from the Net Zero Banking Alliance (NZBA) in the month before Donald Trump’s inauguration as US President. This move was anticipated given Trump’s pledge to reverse all policies related to greenhouse gas (GHG) reduction. On his first day in office (January 20, 2025), President Trump signed an executive order to withdraw the US from the Paris Agreement and rescinded all orders restricting oil drilling. The trend of withdrawal from the NZBA extends beyond the US. Five Canadian banks announced their exit post-inauguration, while European banks are also considering a similar action.
  • Donald Trump’s presidency may prompt financial institutions to minimize their business risks. Prior to his inauguration, lawsuits were filed and anti-ESG legislation was proposed, arguing that financial institutions’ GHG reduction policies are discriminatory and hindrances to the free operation of the oil and coal exploration industries. These legal challenges are ongoing. However, banks exiting the NZBA will continue to support clients in their green transition and may adopt more flexible strategies to accommodate customers’ business operations.
  •  Although the withdrawal of several financial institutions from the NZBA may not directly impact their GHG reduction efforts, it reflects shifting dynamics influenced by national politics. These changes may prompt the financial service sector – including banks, funds, insurance companies, and other financial businesses operating in or connected to the US – to reassess their GHG reduction strategies in response to President Trump’s policy direction.

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