Financial institutions have been steadily withdrawing from major climate-focused alliances in recent months, with the trend accelerating after Donald Trump’s re-election in November.

Despite this, experts suggest that banks remain committed to sustainability, even as they distance themselves from organizations like the Net-Zero Banking Alliance (NZBA) and Climate Action 100+.

The shift follows heightened political scrutiny of environmental, social, and governance (ESG) initiatives, particularly from Republican lawmakers.

Since his return to the White House, Trump has moved quickly to roll back climate policies, signing executive orders to withdraw the U.S. from the Paris Agreement, declare a national “energy emergency,” and pause wind power development.

Goldman Sachs was the first major Wall Street firm to leave the NZBA after the election results, making its exit official in December. The bank did not provide a specific reason for its departure but stated that it remained committed to its climate targets.

Other major U.S. banks quickly followed. Wells Fargo, Bank of America, and Citi withdrew by the end of 2024, while Morgan Stanley and JPMorgan Chase exited in early January, just weeks before Trump’s inauguration.

The mass departures left the future of voluntary climate alliances in question, raising concerns about whether banks would continue working toward net-zero goals outside of formal coalitions.

The NZBA withdrawals are not isolated incidents. Asset management giant BlackRock recently exited the Net-Zero Asset Managers (NZAM) initiative, citing confusion about its ESG policies and increasing legal scrutiny.

A January letter from BlackRock executives noted that membership in the initiative had subjected the firm to legal inquiries from multiple public officials.

Shortly after BlackRock’s departure, NZAM announced a temporary suspension of its operations, citing challenges in balancing different regulatory and client expectations.

Other financial institutions have distanced themselves from climate alliances as well. Northern Trust Asset Management confirmed it had left both the NZAM initiative and Climate Action 100+, a coalition that focuses on engaging corporations to improve climate governance and reduce emissions.

JPMorgan Asset Management, State Street Global Advisors, and subsidiaries of Franklin Templeton and Sun Life Financial were among several firms that exited Climate Action 100+ last year, driven in part by Republican-led investigations into ESG-focused investment strategies. BlackRock, while not fully withdrawing, downgraded its membership to a smaller international arm.

Republican lawmakers have been at the forefront of the pushback against ESG initiatives, with financial institutions facing multiple probes in recent years. The six major banks that recently left the NZBA—Bank of America, Citi, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Wells Fargo—had all been subject to separate investigations by Republican state attorneys general and agriculture officials. These probes scrutinized their climate commitments and raised questions about potential antitrust concerns.

Texas Attorney General Ken Paxton, who had been investigating major U.S. banks for their involvement in the NZBA, announced he would end his probe following their exits. He had previously criticized the alliance for promoting what he called “unlawful ESG commitments.”

Trump’s return to office, along with Republican control of both the House and Senate, has created an environment of heightened scrutiny for banks and asset managers involved in ESG initiatives. Industry leaders suggest that financial institutions are taking a cautious approach, seeking to avoid unnecessary regulatory battles while maintaining their long-term sustainability objectives.

“We have a president that is willing to be very bold in action,” said Arvin Vohra, CEO of Redaptive, an energy-as-a-service provider. He noted that many financial institutions are now reevaluating their public commitments to ESG policies in light of the changing political landscape.