Some experts say big banks leaving the Net Zero Banking Alliance won’t change much

ICYMI, six major US banks left the Net-Zero Banking Alliance, a UN-supported group through which banks pledged to align their lending, investments, and market activities to achieve net-zero emissions by 2050. The departures, which were followed by four Canadian banks, were widely seen as a response to criticism net-zero pledges have drawn from the political right in the US.

And while the exodus is certainly notable, experts told Tech Brew that the alliance itself was more of a way for banks to brand themselves as going green rather than a pathway for them to actually achieve net-zero greenhouse gas emissions—and that leaving the group probably won’t have much bearing on their business.

Shivaram Rajgopal, the chair of Columbia Business School’s accounting division, said he suspects that leaving the alliance won’t make banks lose retail customers. In fact, Rajgopal said staying in the group might be a detriment to business: For example, if an alliance bank decides not to lend to an energy-inefficient company, that company could take its business to one of the banks that’s left the group.

“[There will be] two regimes,” Rajgopal said of banks that stay in the group and those that don’t. “You’re going to have a different clientele.”

August Fern, who chairs the Climate Tech Track at UC Berkeley’s SkyDeck startup accelerator and is a partner at Baruch Future Ventures, told Tech Brew that banks that leave the alliance will be “just as able to finance any climate technology deal as they were before.”

“They’re gonna back any deal that makes them money,” Fern said. “If there’s a profitable solar deal, they’re still going to back that solar deal.”

That’s why, in Fern’s opinion, the alliance itself wasn’t groundbreaking in the first place.

“I don’t think [banks leaving is] going to make any major impact,” Fern told Tech Brew. “There was no accountability.”