Chris Skinner
Over the last decade or so, there’s been a big rise of Greentech and Green Fintech. Unfortunately, the banking industry isn’t listening. I wrote a book about it, along with over twenty other contributors, and the gist is that we can use technology in finance to make the world a better place … except that bankers aren’t listening.
Since that book came out – just three years ago – investment in fossil fuel firms from the major banks of the world has increased whilst the focus on responsible banking has collapsed, as have the banks’ commitments to net zero. Just in the last week, a wave of headlines has emphasised how banks don’t care about our future planet:
Launched in 2021, the alliance originally united more than 130 banks managing over $74 trillion in assets
The Net-Zero Banking Alliance (NZBA) was established over four years ago but has struggled to keep its members since the election of US President Donald Trump, who has referred to climate change as a “hoax.” This alliance, a key part of the broader Glasgow Financial Alliance for Net Zero (GFANZ) launched in 2021, originally united more than 130 banks managing over $74 trillion in assets. Its purpose was to push member banks to achieve net-zero greenhouse gas emissions across their lending and investment portfolios by 2050, with interim targets for 2030.
However, in 2023, the coalition faced significant disruption as major US banks like JPMorgan Chase, Citi, Morgan Stanley, and Bank of America pulled out due to political and legal issues. Following their exit, Canadian banks, which had substantial investments in fossil fuel financing, did the same. Shortly thereafter, European banks such as HSBC, Barclays, and UBS also withdrew, resulting in a weakened alliance. Importantly, the alliance has paused its activities amid the membership exodus and a vote on restructuring.
Banks are withdrawing from the NZBA largely due to a combination of political, regulatory, economic, and legal pressures. This shift has been particularly influenced by the election of Trump, which led to changes in US policy that oppose climate action and ESG investing. In September 2024, a group of 23 Republican attorneys general launched inquiries into organisations such as the Science Based Targets initiative and CDP, warning that collective target-setting may illegally constrain market competition.
US federal bank regulators have withdrawn a framework to help large banks manage their climate risk, saying existing standards already take risk into account. However, critics say the decision is politically motivated.
The joint statement from the US Federal Reserve, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency announced that they were withdrawing from the principles governing climate-related financial risk management for large financial institutions, which were first issued in 2023.
“All supervised institutions are expected to consider and appropriately address all material financial risks and should be resilient to a range of risks, including emerging risks,” the statement says.
The withdrawal is just the latest move by US federal agencies since the start of President Donald Trump’s second term to downplay climate change and reverse course from the direction taken by the previous administration.
When the principles were first announced, Fed chair Jerome Powell said, “banks need to understand, and appropriately manage, their material risks, including the financial risks of climate change”.
While Powell has said the regulator is not a “climate policymaker”, he noted that the climate risk management framework was focused on risk managemen,t which falls within the remit of the central bank.
Five of the seven Fed board members approved the withdrawal. Governor Michael Barr, who voted against withdrawing the guidelines, said in a statement that the board’s decision “defies logic and sound risk management practices” and warned it would “make the financial system riskier even as climate-related financial risks grow”.
“The rescission contains literally no evidence to support taking this step, only two years after putting the principles into effect. We owe the public a rational, evidence-based explanation for our actions, and this rescission fails that test,” Barr states.
When the guidelines were created, they went through a one-year comment period with feedback from various agencies, as well as public letters of support.
Other experts have also stated that considering climate risk and their impacts are well within the mandates of central banks. Kevin Stiroh, former chair of the Fed’s supervision climate committee, told Green Central Banking that if climate change has a material impact, then it is a risk that should be managed.
The agencies’ decision is a “politically motivated move in the wrong direction” and puts the US banking system at risk, said Elyse Schupak, policy advocate at Public Citizen.
“The increase in the frequency and severity of climate disasters and the rapidly escalating property insurance crisis mean the agencies should be working harder to understand and mitigate climate-related financial risks faced by banks and the financial system, not backtracking,” she said.
Jessye Waxman, campaign advisor at the Sierra Club, noted that economists have warned the financial impact from climate change could be as bad as the Great Depression but permanent.
“Fed chair Powell oversaw the adoption and now the rescission of this guidance just two years later. The science hasn’t changed, the risks have only worsened and the best practices for banks are clearer than ever. The only relevant change is the administration in power, which shows that this reversal is a purely political move”.
The last headline really got me, as Barclays and HSBC have been hugely humiliated by Extinction Rebellion over the last decade, and yet still continue to frack the planet.
The thing is that most bankers I talk to accept that they need a moral conscience and to invest ethically. They just don’t do it. Take the example of HSBC’s former head of responsible investments:
“Who cares if Miami is six metres underwater in 100 years? Amsterdam has been six metres underwater for ages, and that’s a really nice place … the average loan length in a big bank like ours, HSBC, is six years. What happens to the planet in year seven is irrelevant … there’s always some nut job telling me about the end of the world.”
Stuart resigned shortly after that speech, and still seethes about how his views were misinterpreted. They weren’t. In a recent update on social media, he said that he suffered badly after that speech due to “the stress on my family. Giving up our London home. Being broke.” Tough, mate … but appropriate.
The thing that really gets me is that Stuart’s articulation of the banker’s view is spot-on. If the bank can get a good return on risk by funding fossil fuel firms for the next six years and then the planet falls off a cliff, that’s fine. The focus is on the six-year return on risk, not year seven or 2050 or 2100.
All in all, when my children and grandchildren have to fly to Mars to get a life, banks will be sitting saying: nothing to do with us. Well, it’s all to do with you and your funding of fossil fuel firms, denying climate change, leaving the net zero alliance, ignoring the principles of responsible banking and so on and so on.
https://thefinanser.com/2025/10/bankers-and-climate-change-a-disaster-waiting-to-happen