Tennessee concludes investigation against Wells Fargo following bank's abandonment of net-zero ambition
The investigation into Wells Fargo's climate goals by a coalition of U.S. states, led by Tennessee, has come to an end. This decision was largely influenced by the changing enforcement priorities under the Trump administration, which sought to dismiss or freeze various regulatory investigations into banks and corporations, including those relating to climate-related financial disclosures and goals.
The group of states, which includes attorneys general from Alabama, Alaska, Arkansas, Indiana, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, Oklahoma, South Carolina, Texas, Utah, Virginia, and West Virginia, had been probing whether Wells Fargo and five other U.S. banks have violated antitrust or consumer protection laws.
The Trump administration's actions have far-reaching implications for net-zero emissions policies. By ending investigations into banks like Wells Fargo, regulatory pressure on financial institutions to meet credible, science-based net-zero commitments is weakened. This could potentially allow continued financing of activities that drive climate change.
Moreover, this move fits into a pattern of legislative and regulatory actions by some states that preempt climate policies and fossil fuel restrictions, impeding decarbonization efforts nationally.
In a related development, Wells Fargo has updated its sustainability strategy, which includes leaving the United Nations-backed Net-Zero Banking Alliance (NZBA). Other banks, such as Goldman Sachs, Bank of America, Citi, Morgan Stanley, and JPMorgan Chase, have also left the NZBA.
Upon resuming office, President Trump has directed the U.S. to withdraw from the Paris Agreement again and declared a national "energy emergency." The Trump administration has also halted funding distributions related to the Inflation Reduction Act and the Bipartisan Infrastructure Law.
Initiatives like the United Nations-backed Net-Zero Banking Alliance require member banks to align their financial activities to achieve net-zero emissions by 2050 and set specific targets for carbon-intensive sectors by 2030. However, Wells Fargo has dropped its target to pursue net-zero financed emissions across its portfolio by 2050, and in February, it scrapped net-zero financed emissions goals and discontinued 2030 sector-specific targets on financed emissions.
In a statement, Tennessee's Attorney General Jonathan Skrmetti announced that the banks potentially "compromised their fiduciary obligations" to their customers by participating in such initiatives. Arkansas Attorney General Tim Griffin has stated that they have ended their investigation into Wells Fargo based on the bank's assurances that they are ending improper net-zero emissions policies. However, if Wells Fargo reverses course, Arkansas will reopen the investigation and take action to protect consumers.
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- The ending of the investigation led by Tennessee and other states into Wells Fargo's climate goals suggests a potential weakening of environmental science-focused regulations in the finance and business sectors, given the Trump administration's emphasis on climate-change-related financial disclosures.
- The withdrawal of Wells Fargo, along with other banks like Goldman Sachs, Bank of America, Citi, Morgan Stanley, and JPMorgan Chase, from the United Nations-backed Net-Zero Banking Alliance could potentially free up financing for activities contributing to climate change, undermining efforts towards net-zero emissions in the environmental-science community.
- The Trump administration's dismissal of regulatory investigations into banks' climate-related financial disclosures and goals seems to align with political decisions that prioritize business interests over general-news topics like efforts to combat climate change, thus affecting national climate-policy initiatives.
