Trump Policies Create Headwinds for Global Decarbonization
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Major financial institutions in the United States and Japan are triggering a cascade by retreating from the international decarbonization framework. The shift is driven by mounting legal risks in the wake of the return of President Donald Trump to the White House in January 2025. Trump is known for his opposition to climate action.
These institutions were expected to lead the global decarbonization effort. Now, however, they are criticized for appearing to appease the US President.
As with his stance on free trade, the new Trump administration is once again shaking the foundations of international cooperation. This time by targeting climate initiatives. (©Sankei Shimbun/JAPAN Forward)
At the center of the withdrawals is the Net-Zero Banking Alliance (NZBA), launched in 2021 under the Biden administration. By 2024, more than 140 financial institutions had joined the alliance. Each pledged to align their lending and investment strategies with decarbonization goals, aiming for net-zero greenhouse gas emissions by 2050.
However, after Trump's return to office was confirmed in November 2024, US banks — including Goldman Sachs and Citigroup — moved swiftly to exit. Sensing a changing political climate and heightened legal risks, they pulled out in rapid succession.
The trend soon spread to Japan. In March, Sumitomo Mitsui Financial Group (SMFG) led the exit, followed by Mitsubishi UFJ Financial Group (MUFG), Mizuho Financial Group, and others. Among Japan's major banks, only Sumitomo Mitsui Trust Group (not the same as SMFG) remains in the alliance. (©Sankei Shimbun/JAPAN Forward)
Behind the withdrawals are concerns that NZBA participation could violate antitrust laws. More specifically, there is concern that coordinated reductions in lending to fossil fuel companies would be viewed as antitrust actions.
In the US Congress, especially among Republican lawmakers, the alliance has been labeled a "climate cartel." Under an administration unafraid of disrupting private enterprise, such as through reciprocal tariffs, remaining in the NZBA is increasingly considered risky.Meanwhile, the financial institutions claim continued commitment to decarbonization. However, a megabank insider criticized the gap between their words and actions. "Didn't they join because they believed in it? Now it just looks like they're leaving because everyone else is."
Financial support has played a critical role in affirming that "decarbonization has value," even when environmentally friendly products come at a higher cost. That belief has helped sustain momentum in the climate movement. The recent wave of NZBA exits could trigger a sharp shift in tone — and risk stalling progress.
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