Morgan Stanley Follows Citigroup and Bank of America by Exiting Climate Alliance

Morgan Stanley has joined Citigroup and Bank of America in exiting the UN-backed Net-Zero Banking Alliance (NZBA), marking a week of major withdrawals by three of America’s largest banks. These departures reflect a strategic shift as Wall Street recalibrates its approach to public climate commitments amid mounting political and regulatory pressures.

The NZBA, launched in 2021 to drive net-zero emissions in banking portfolios, is unraveling as U.S. members face backlash from Republican lawmakers. Threats of antitrust litigation and state-level restrictions have made ESG initiatives a lightning rod, pushing banks to reassess their participation in high-profile alliances. Morgan Stanley’s exit follows similar moves by Goldman Sachs and Wells Fargo, further weakening the coalition.

While Citigroup and Bank of America maintain their broader climate goals, their NZBA withdrawals suggest a pivot toward “quiet ESG.” This strategy emphasizes environmental risk management without the political baggage of public pledges. Both banks remain in GFANZ’s Principals Group, signaling that climate considerations haven’t been abandoned, just rebranded.

For investors, this retreat raises questions about the future of ESG-focused assets. Markets are bracing for increased volatility as institutions scale back public commitments while still integrating environmental factors into risk assessments.

The broader implications are clear: Wall Street is adjusting to a new reality where ESG carries heightened political and regulatory risk. This isn’t the end of climate initiatives in finance, but the era of bold, public net-zero pledges appears over. For now, banks seem to be choosing survival over symbolism in an increasingly hostile environment.