Earlier this year, each of the major US banks announced their withdrawal from the Net Zero Banking Alliance. This move, which was likely undertaken in response to the policy priorities of the Trump Administration, was criticized by a number of climate activists.
At this point, the actions of these major US banks have now triggered semi-official regulatory attention. Senior Democratic Senators--Warren (D-MA) and Whitehouse (D-RI)--have sent letters to these banks that reportedly “seek 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.” However, as members of the minority party in the Senate, the practical impact of these letters by the Democratic Senators will likely be limited--they do not have the power to convene hearings or issue subpoenas. Nonetheless, these actions are significant, as they signal potential regulatory actions and hint at a regulatory agenda should the Democratic Party regain power in the midterms--and also offer a road map for potential investigations or enforcement actions by sympathetic state attorneys-general.
In other words, the conflict over the degree to which business interests must take into account climate concerns has not concluded, despite the Trump Administration's recent actions and policy pronouncements.
The biggest US banks are the targets of an investigation initiated by Democratic Senators Sheldon Whitehouse and Elizabeth Warren into Wall Street’s retreat from its climate pledges. 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 letters sent to the banks that were reviewed by Bloomberg. In the letters, . . . Whitehouse and Warren 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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