Banks Try Quiet Quitting on Net Zero

For some bankers, net-zero is like a new year’s resolution—a pledge one makes and often breaks before a year has passed.

Several of the largest banks, including JPMorgan, Bank of America, and Morgan Stanley, headed into the 2021 United Nations Climate Change Conference (COP26) as members of the world’s biggest zero-carbon finance club. Their membership in the Glasgow Financial Alliance for Net Zero (GFANZ), a group of roughly 500 financial sector entities, publicly committed their banks to reach net-zero carbon emissions by midcentury.

By September they were among a faction ready to quit, according to sources familiar with the matter. JPMorgan, Bank of America, and Morgan Stanley declined to comment.

A year on from COP26, some big banks seem worried they jumped on the bandwagon too soon, especially as oil and gas companies have experienced a market resurgence. What makes the prospect of net-zero—or at least the vow to come up with near-term benchmarks toward that goal—such an anxiety-provoking proposition?

The revived fortunes of fossil fuels, especially coal, may explain some of the weakened resolve for decarbonization. Global bank lending to fossil fuel companies is up 15%, to over $300 billion, in the first nine months of this year, from the same period in 2021, according to data ­compiled by Bloomberg.