On January 18, 2025, the U.S. Federal Reserve announced its withdrawal from the Network of Central Banks and Supervisors for Greening the Financial System (NGFS), just two days before Donald Trump's inauguration. This decision follows a broader trend among major U.S. financial institutions reassessing their commitments to climate initiatives, including BlackRock's recent exit from the ‘Net Zero Asset Managers Initiative’ [aa31be40][bf83629f].
The Fed had joined NGFS in December 2020, with the aim of integrating climate risk into financial practices. However, Fed Chair Jerome Powell stated that the scope of the NGFS exceeded the Board's mandate, leading to a vote where five officials supported the withdrawal. This move has drawn mixed reactions; Rep. Andy Barr praised the decision, while Ben Cushing from the Sierra Club criticized it, linking it to the incoming Trump administration's anticipated climate stance [aa31be40].
Trump is expected to withdraw the U.S. from the Paris Climate Accords, which he previously described as a 'total disaster.' Powell has emphasized the Fed's non-involvement in climate policymaking, especially in light of criticism from Senate Republicans regarding climate risk assessments in the banking sector [aa31be40].
The recent exits from climate-focused alliances by major banks, including JP Morgan, Citigroup, and Bank of America, reflect a significant shift in the political landscape affecting corporate climate commitments. Analysts attribute these withdrawals to rising 'anti-woke' sentiments among right-wing politicians, indicating that the political environment is increasingly influencing corporate strategies [0f884b91].
As BlackRock and other financial institutions navigate these changes, the NZBA, which aims for net-zero emissions by mid-century, now has 141 remaining members, controlling approximately 40% of global banking assets, or $64 trillion [0f884b91]. Meanwhile, European banks such as Standard Chartered, ING, and Deutsche Bank continue to support climate initiatives, showcasing a stark divide between U.S. and European financial institutions regarding their commitment to environmental goals [3057feaf]. The evolving narrative around corporate climate commitments suggests that the future of collective action in the banking and investment sectors remains uncertain as these major players respond to both environmental challenges and societal pressures [40c98868][3057feaf].