Wall Street Targeted as Warren Leads Probe of Climate Rollback

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(Bloomberg) — The biggest US banks are the targets of an investigation initiated by Democratic Senators Elizabeth Warren and Sheldon Whitehouse into Wall Street’s retreat from its climate pledges.

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The probe seeks to examine the extent to which banks have allegedly caved in to pressure from Republicans and fossil-fuel interests to abandon their fiduciary duty to manage the financial risks that stem from climate change, according to drafts of the letters seen by Bloomberg.

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In the letters, which are addressed to the chief executive officers of JPMorgan Chase & Co., Wells Fargo & Co., Bank of America Corp. and Citigroup Inc., Warren and Whitehouse ask that the banks provide documents on the internal discussions that led the banks to leave climate alliances. They’re also seeking emails and memoranda outlining internal talks at the banks on the financial risks related to climate change, the draft letters show.

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A spokesperson for Warren and Whitehouse confirmed the authenticity of the documents.

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Since Republicans control the Senate, it’s unlikely that the two Democrats will be able to convene committee hearings or subpoena the banks. 

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The demands follow a mass exodus by Wall Street firms from the world’s largest climate coalition for the industry, the Net-Zero Banking Alliance. Those departures all took place between the November election of President Donald Trump and his January inauguration, as the industry assessed the implications of GOP hostility toward pro-climate strategies. Trump’s Energy Secretary Chris Wright has publicly referred to net zero as a “terrible” and “sinister” goal. 

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Warren is no stranger to calling out what she sees as backsliding on climate commitments by banks and their regulators. JPMorgan, the Federal Reserve and the Securities and Exchange Commission have all felt her disapproval in the past year.

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A Wall Street retreat from environmental policies “poses risks to the US financial system and broader economy,” Warren and Whitehouse wrote in the letters seen by Bloomberg. It also increases the likelihood that a warming planet will destabilize the economy, they said.

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The US walkout from NZBA has forced the alliance to review its membership terms. NZBA no longer requires signatories to commit to aligning their business with the goal of limiting global warming to the critical threshold of 1.5C.

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Spokespeople for JPMorgan, Citigroup, Bank of America and Wells Fargo declined to comment.

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Banks that have left NZBA have said they remain committed to helping clients manage the transition to a low-carbon future. Wells Fargo, however, has since abandoned its goal of achieving net zero financed emissions by 2050.

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Banks in the US are struggling to navigate the political reality of an administration that has vilified climate policies as it takes a sledge hammer to the green agenda of former President Joe Biden. Climate finance coalitions have been singled out by the GOP, which has alleged that such affiliations represent antitrust breaches that prevent the fossil-fuel industry from gaining fair access to financing.