Dive Brief:
- Wells Fargo has dropped its goal of pursuing net-zero financed emissions across its portfolio by 2050, becoming the latest bank to revise its sustainability strategy as the ESG sector faces increased scrutiny.
- The San Francisco, California-based bank shared in an update Friday that it was scrapping the net-zero financed emissions goal, as well as discontinuing 2030 sector-specific targets on financed emissions. The latter focused on carbon-intensive sectors such as oil and gas, power, aviation, steel and automotive production.
- Wells Fargo said it would continue “providing financing and expertise to help clients pursue their own objectives” and — despite abandoning its targets for financed emissions — maintain other sustainability goals it previously committed to, including one to achieve net-zero emissions across its own operations by 2050. The bank will also maintain a pair of goals that aim to reduce its carbon footprint by 2030.
Dive Insight:
Wells Fargo said it would maintain its goal of deploying $500 billion in sustainable finance by 2030 and has provided $178 billion in sustainable finance activities between 2021 to 2023 towards that goal. The financing includes $16 billion directed toward renewable energy and over $15 billion that has been allocated to clean transportation.
The bank also said it would continue to uphold operational sustainability targets it had set for the end of the decade, including a goal to cut scope 1 and scope 2 emissions by 70% and to reduce energy, waste stream and water usage by 50%, 50% and 45%, respectively — all compared to 2019 baselines. Additionally, the bank said it aims to meet all of its annual purchased electricity consumption needs with renewable energy sources.
The bank set both its financed emissions targets in 2021 to support the clean energy and low-carbon transition. At the time, Wells Fargo CEO and President Charles Scharf said “climate change is one of the most urgent environmental and social issues of our time, and Wells Fargo is committed to aligning our activities to support the goals of the Paris Agreement and to helping transition to a net zero carbon economy.”
However, when Wells Fargo scrapped both financed emissions targets last week, it said achieving the goals was contingent on “many factors outside [its] control.” These included public policy, consumer attitudes, and technology shifts that would allow its clients to “move quickly to lower-emitting operating models,” the bank reported.
“Many of the conditions necessary to facilitate our clients’ transitions have not occurred,” the bank said in its Feb. 28 update.
Wells Fargo’s updated sustainability strategy comes almost two months after it exited the United Nations-backed Net-Zero Banking Alliance, a sector coalition whose members committed to aligning their financial activities with the aim of reaching net-zero emissions by 2050. Wells Fargo’s exit was preceded by Goldman Sachs’ departure from NZBA and was followed by a wave of departures from other U.S. banks. Bank of America, Citigroup, Morgan Stanley and JPMorgan Chase all followed Goldman Sachs and Wells Fargo out the door.
The departures came only a few weeks before President Donald Trump’s inauguration. Since returning to the White House, Trump has signed a flurry of executive orders that have signaled a reversal on the nation’s federal climate policy. These included orders to withdraw the U.S. from the Paris Agreement, again; declare a national “energy emergency;” pause all wind power development; and suspend all funding disbursements related to the Inflation Reduction Act and the Bipartisan Infrastructure Law.
The Wells Fargo update also came shortly after rival bank HSBC announced it was pushing back a target to achieve net-zero emissions across its own operations and supply chains by 20 years. The U.K. based bank said it had “revisited [its] ambition” and was now delaying its goal of hitting net-zero in its operations, business travel and supply chain from 2030 to 2050.
