The Guardian view on climate finance: crumbling under a second Trump presidency | Editorial
EArrier this month, when the Nordic countries were struck by an unprecedented heat wave and forest fires in the United States began to spout “fire clouds”, Barclays withdrew from Net Zero Banking Alliance. History may have seemed less alarming than extreme time, but it has existential implications, because the finance sector quietly makes its old climate commitments.
The initiative is part of the Glasgow Finance Alliance for Net Zero (GFANZ), a voluntary banking network that Mark Carney, formerly Special UN envoy to climate action and now the Prime Minister of Canada, launched in 2021. At the time, the Alliance, which encouraged banks and directors to work for the objectives of the Paris Agreement RIGHT. Mr. Carney described it as a “breakthrough”.
But times change. The election of Donald Trump, whose advisers waged war on “climate fanaticism” and “awakened” capitalism, created an impunity environment where companies no longer need to pay the lip service to progress. Fossil fuel companies have donated $ 19 million to Mr. Trump’s inauguration fund. So far, their investment has borne fruit. Trump withdrew from the Paris Agreement, used an “invented” energy emergency to justify the expansion of fossil fuels, opened public land for drilling and plans to reduce the financing of renewable energies.
With America which rené on climate action, companies may feel that they can relax. Barclays is the second British bank to leave the net Zero Alliance after HSBC left earlier this year. Six of the biggest American banks left just a few weeks before the inauguration of Mr. Trump. Certain institutions have undergone direct pressure from the right: Blackrock has left the Net Zero Asset Managers initiative, another GFANZ group, after being prosecuted by Republicans who affirmed its promotion of environmental, social and governance (ESG) objectives had reduced coal production. In each of its annual investor letters from 2020 to 2024, the BlackRock chair, Larry Fink, has appointed climate change. His 2025 letter made no mention.
Gfanz’s deterioration reveals the weaknesses to rely on businesses to do the right thing. Its objectives were always vague: instead of calling difficult limits on the financing of fossil fuels, GFANZ encouraged banks to invest in sectors with low carbon issues. He has since derived from his mission, expanding his members to companies without zero net commitments. Although it has never been supposed to replace the government’s action, inactive governments welcomed it. Boris Johnson, Prime Minister at the time of his creation, promised that the Alliance would help “resume green”.
Many green financing initiatives have less to do with the prevention of climate rupture than to minimize the exposure of investors to the risks that this creates, such as carbon taxes or borders on fossil fuels. “Green ethical investment”, writes Adrienne Buller, is a way to bet “on the probability of a greener economy, rather than helping to give birth to this economy”. When the risk of regulation decreases, as he did under Trump, the same goes for this style of investment.
The lesson is that the government’s action (and inaction) will determine the gravity of the climate crisis. Governments must prohibit the extraction of fossil fuels, reduce profits through progressive carbon taxes, support renewable energies and confront powerful interests. The myth that companies are capable of self-political have resulted in dangerous delay.
