(Bloomberg) -- Morgan Stanley has ended its membership of a major climate banking group, joining the wave of Wall Street firms that recently left a global alliance aimed at helping reduce the greenhouse effect of carbon emissions.
Morgan Stanley is leaving the Net-Zero Banking Alliance, the lender announced Thursday. Citigroup Inc. and Bank of America Corp. announced earlier this week that they were doing the same. The departures come amid a tense political climate in the United States, where the country's largest financial firms have become targets of Republican campaigns that have labeled net-zero carbon climate groups.
Such attacks have increased, and last November Texas brought legal action against BlackRock Inc., Vanguard Group Inc. and State Street Corp. for allegedly violating antitrust laws by using climate-friendly investment strategies to reduce carbon supply. BlackRock said the claim that it invests in companies with the intent to harm them is unfounded. Other banks that have recently left the NZBA include Goldman Sachs Group Inc. and Wells Fargo and Co. All said they remain committed to their net-zero emissions targets and helping their clients reduce their carbon footprints.
"We will continue to report on our progress as we work towards meeting our interim 2030 emissions financing targets," Morgan Stanley said in an email.
NZBA spokesman Daniel Storey declined to comment.
Morgan Stanley has added some of its environmental targets to 2024. Among those targets was a plastics financing target, with a report published in September leaving out an earlier commitment to facilitate the prevention, elimination or reduction of 50 million tonnes of plastic waste from the environment by 2030. The bank also warned of the "unintended consequences" of withdrawing funds too quickly from high-carbon clients planning to decarbonise.
The NZBA was one of several finance industry groups associated with the Glasgow Financial Alliance for Net Zero. GFANZ ended 2024 by adjusting the way it operates. In future, finance firms will be free to turn to GFANZ for advice and assistance without being members of one of the sector alliances. The departures from NZBA follow similar departures from climate groups elsewhere in the financial sector. In 2023, a coalition of insurers experienced a mass exodus due to threats of legal action. And in 2022, a similar group of asset managers split from Vanguard Group, the world's second-largest fund manager. Other investment firms followed suit.
The lawsuit filed in Texas against the three largest U.S. money managers alleges their involvement in the Net Zero Asset Managers Initiative, another climate group affiliated with GFANZ. GFANZ was established more than 3.5 years ago, on the eve of the UN COP26 climate conference in Scotland. At the time, it had two goals: to increase the number of financial institutions committing to net zero and to facilitate industry debate on the challenges of the low-carbon transition.
In an updated statement, GFANZ said it had "achieved its initial goal of developing the building blocks of a financial system capable of financing the transition to net zero."
To succeed in the transition of the economy, we must accelerate progress in public policy and technology development and fill three critical gaps: data, action and investment, the group said. GFANZ now plans to "focus on closing the investment gap to help unlock more than $5 trillion a year in opportunities created by countries modernizing their energy systems and putting economies on a decarbonization path over the next decade." (The NZBA is part of the Glasgow Net Zero Finance Alliance, co-chaired by Mark Carney, chairman of Bloomberg Inc. and former governor of the Bank of England, and Michael R. Bloomberg, founder of Bloomberg News, the parent company of Bloomberg LP.)
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