Wells Fargo & Co. became the third US bank to withdraw in 2024 from the Net-Zero Banking Alliance (NZBA), a United Nations-convened coalition that has spurred litigation and political pressure from US states supportive of the fossil fuel industry.
In a Dec. 20 news release, Texas Attorney General Ken Paxton took credit for Wells Fargo's NZBA departure, which he said followed the state's review of the bank as a "potential boycotter of energy companies" prohibited under Texas law.
"Following Wells Fargo's withdrawal from the NZBA, Texas will end its review, enabling state governmental entities to do business with Wells Fargo," the attorney general said. Paxton urged other financial institutions to follow the bank's example and abolish environmental, social and governance policies "that are hostile to our oil and gas industries."
Wells Fargo confirmed the departure in an email without explaining its reasons for quitting the high-profile network.
An NZBA spokesperson said in an email that the alliance prefers to have no bank leave the coalition "but respects the decision Wells Fargo has made based on its own individual circumstances."
Since NZBA's inception in April 2021, two European banks have also left the coalition. Germany's GLS Bank departed in early 2023 over a report showing that 72% of alliance members have continued to finance fossil fuel projects in Africa. UK-based OakNorth Bank PLC left in February 2023, citing limited staffing and a need to streamline its memberships across multiple climate-related networks to conserve resources.
Wells Fargo's decision to leave the NZBA comes less than two weeks after Goldman Sachs Group Inc. also quit the coalition.
The bank departures illustrate the difficult balancing act climate-focused business networks face, as well as the limits of such voluntary organizations. The NZBA has also come under fire from environmental advocates for not demanding more from its bank members.
In a Dec. 16 letter to the alliance, 20 advocacy groups expressed concern over some NZBA members "backsliding" on their commitment to help the world try to keep the global temperature rise to 1.5 C from preindustrial levels.
"The alliance must not seek to appease or accommodate potential defectors or remain complacent when its members dilute their targets, as doing so undermines the very purpose of the coalition and jeopardizes global climate goals," the groups wrote.