Wells Fargo has decided to exit the Net-Zero Banking Alliance (NZBA), marking the second major departure from the UN-backed coalition of banks dedicated to advancing global net zero goals through their financing activities, following Goldman Sachs earlier this month.

Founded in 2021, the Net-Zero Banking Alliance is a coalition of more than 140 banks spanning 44 countries and representing approximately $73 trillion in assets. Members of the NZBA commit to transitioning operational and attributable greenhouse gas (GHG) emissions from their financing activities to align with net zero pathways by 2050, and to set 2030 financed emissions targets, initially focused on key emissions intensive sectors. Earlier this year, the group issued new guidelines for climate target setting for banks, expanding its requirements to include a commitment to align capital markets activities such as debt and equity underwriting to bank’s 2050 net zero goals, in addition to the prior lending-focused commitment.

Wells Fargo joined the group in October 2021, after setting its own climate targets earlier that year, including goals to achieve net zero GHG emissions by 2050, including emissions attributable to financing. Despite leaving the climate, Wells Fargo’s net zero targets remain on its website, in addition to interim 2030 financed emissions reduction targets set by the bank for the Oli & Gas, Power, Automotive, Steel and Aviation sectors.

The NZBA forms part of the Glasgow Financial Alliance for Net Zero (GFANZ), a UN-backed umbrella group of net zero-focused financial sector coalitions, which also includes the Net Zero Asset Managers initiative (NZAM), Net Zero Asset Owner Alliance (NZAOA), Net Zero Financial Service Providers Alliance (NZFSPA), the Net Zero Investment Consultants Initiative (NZICI), the Paris Aligned Asset Owners (PAAO), the Venture Climate Alliance (VCA), and the Net-Zero Export Credit Agencies Alliance (NZECA).

GFANZ had also previously included the Net Zero Insurance Alliance (NZIA), which was discontinued earlier this year, following a string of departures from the group, which had been under pressure from Republican politicians in the U.S., who have been warning financial institutions including insurers and asset owners of potential legal violations from their participation in climate-focused alliances.

As political pressure on the net zero-focused associations has continued to build, other GFANZ groups have also seen high-profile departures, although the NZBA had largely avoided this phenomenon until Goldman Sachs’ recent departure.

Republican politicians have claimed credit for the decision, with Texas Attorney General Ken Paxton noting that the announcement followed his office’s review of Wells Fargo as “a potential boycotter of energy companies,” which would have made the bank ineligible to enter into contracts with state government entities.

In a statement welcoming the departure and referring to the NZBA as “an anti-energy activist organization that requires its members to prioritize a radical climate agenda over consumer and investor interests,” Paxton said:

“This is great news for Texas. On August 21, I strongly encouraged that Wells Fargo leave Net-Zero Banking Alliance due to its unlawful ESG commitments. On December 19, Wells Fargo confirmed that they would leave NZBA because of my request.”

In a statement provided to ESG Today following the decision, an NZBA spokesperson said that the group “prefers not to see any bank leave but respects the decision Wells Fargo has made based on its own individual circumstances.”

The spokesperson added:

“More than 100 banks from over 35 countries have chosen to join the Net-Zero Banking Alliance (NZBA) since it was founded in April 2021. Five banks have decided to leave over the same period. The overall increase in membership indicates how important understanding climate risk and the transition to net zero has become to banks and companies around the world.”