Morgan Stanley Leaves Climate Group After Citi and BofA

(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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