Why Are Global Banks Retreating From 1.5°C Climate Targets?

The financial pressures and political headwinds behind this decision

The decision comes amid rising economic and political headwinds. US and UK financial institutions have already begun scaling back their climate pledges.

HSBC recently delayed its net zero timeline by two decades, while US giants like Morgan Stanley and Wells Fargo have publicly softened or abandoned their 2050 targets.

The shifting policy environment, especially the resurgence of pro-fossil fuel rhetoric in the US, has made it harder for banks to justify aggressive near-term decarbonisation.

“The subsequent years have seen their minions try to deliver on those commitments — and realise it’s actually very hard because there’s a giant co-ordination problem,” says Simon Hallett, Head of Climate Strategy at Cambridge Associates.

Banks also face uncertainty around carbon pricing, regulatory clarity and market signals. 

For many, this has raised questions around fiduciary responsibility and the wisdom of investing heavily in decarbonisation if the 1.5°C goal is no longer within reach.