Industry sentiment has shifted ahead of Donald Trump’s second term, and American corporate giants are abandoning hard-won climate pledges amid mounting pressure from Republican lawmakers.
The US’s six biggest banks — Goldman Sachs, Morgan Stanley, JPMorgan Chase & Co, Wells Fargo & Co, Citigroup and Bank of America — have pulled out of the world’s top climate alliance for the sector in rapid succession, potentially jeopardising their net-zero goals.
The exits from the voluntary Net-Zero Banking Alliance (NZBA) — all announced within a little over a month — are “not unexpected”, says Eric Lim, chief sustainability officer (CSO) at United Overseas Bank (UOB).
“The US is going to revert a little bit in terms of commitments,” he adds, “because for a lot of US companies, to continue on this high-visibility sustainability or decarbonisation commitment is actually going to expose them to a lot of legal risk that is unnecessary and very fraught with danger.”
Banks in the Asia Pacific make up close to a quarter of the NZBA’s 136 members around the world. Speaking on a Jan 14 panel at the National University of Singapore (NUS) Business School, Lim says UOB will remain in the NZBA. Singapore’s other two banks have indicated the same.
In response to The Edge Singapore’s queries, Helge Muenkel, CSO at DBS Group Holdings, says the bank “continuously evaluates our memberships to ensure they align with our values and maximise impact”. “We remain in the NZBA, which serves as a valuable platform for collective action toward achieving net-zero emissions, particularly in an Asian context.”
See also: Goldman Sachs decides to leave world’s top climate alliance for banks
OCBC, too, says it will remain in the Alliance. Mike Ng, group CSO at OCBC, says the bank’s commitment to net zero was a “carefully considered decision”, and staying committed is the “right course of action for both the bank and our stakeholders”.
‘Backsliding’ on oil and gas
The NZBA requires signatories to commit to cutting greenhouse gas emissions from their lending and investment portfolios to align with net-zero pathways by 2050 or sooner.
See also: Citigroup, Bank of America leaving global climate banking alliance
Within 18 months of joining, signatories must also set 2030 targets or sooner, along with a 2050 target, as well as intermediary targets every five years from 2030.
The US banks did not state why they were leaving the NZBA, but released statements saying they remain committed to sustainability.
Goldman Sachs says it has the “capabilities” to achieve its “goals” — without stating which ones exactly — and to support the sustainability objectives of its clients. “We have made significant progress in recent years on the firm’s net-zero goals and we look forward to making further progress, including by expanding to additional sectors in the coming months.”
Meanwhile, JPMorgan says it will “continue to work independently” to “advance the interests of our firm, our shareholders and our clients”. The bank says it remains focused on “pragmatic solutions” to help further low-carbon technologies while advancing energy security.
UOB’s Lim thinks it is “somewhat true” that US banks will continue to maintain their net-zero targets, but he expects “a bit of backsliding” on oil and gas financing. “Particularly domestically in the US, with all the cracking resources, I think you can expect to see a bit of backsliding on that.”
Singapore’s three banks became signatories of the United Nations-convened, industry-led initiative between October 2021 and October 2022, launching their net-zero targets thereafter.
In October 2022, UOB announced its commitment to lowering the emissions intensities of its loans to the power, automotive, real estate, construction and steel sectors by 2050. The bank also committed to stopping financing new upstream oil and gas projects by 2023. Loans to these six sectors make up 60% of UOB’s corporate lending portfolio.
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Since then, the bank has released two updates on its goals. According to a Nov 11, 2024 report, UOB’s 2023 financed emissions fell in the power, automotive, real estate and construction sectors, but rose y-o-y in the steel sector.
China’s ‘massive’ capacity
Unlike in the US, Lim does not think Asia’s banks and corporates will shirk their net-zero commitments or change course for two reasons.
Firstly, China’s green industrial capacity is “massive”, says Lim. “The amount of research and capacity they created around batteries, EV [and] solar is way more than even what they need. And if they can’t sell the technology to the Western world, a lot of that is actually going to come to where we need it, in the developing world, and that’s going to have a deflationary effect.”
Secondly, Asean will benefit commercially from this sustainable development, says Lim. As the developing world progresses, they must decide between building “old technology” or technology that is “a bit more fit for purpose, beyond a four-year Trump presidency”, he adds, and the region stands to gain from closer cooperation.
“If you think about the minerals in Indonesia, the financing capability of Singapore, the renewable energy potential of Malaysia, as well as the manufacturing capability of Thailand, with Vietnam also kind of coming up, there is actually a lot of commercial value in building up a lot of the new economy assets,” says Lim.
Despite Singapore’s small size, the country stands out on the global stage for its credibility, says Lim. “If you’re a small country [that is] pulling a commitment when Trump’s running amok, then when he’s gone, you put your commitment back, I think that’s not Singapore.
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