It’s being called Wall Street’s climate retreat. America’s largest banks are walking away from climate alliances and rebranding how they talk about sustainable investing. Private equity firms are writing down clean energy investments and restructuring leadership.
There’s a narrative forming that the sector is in trouble. But look beyond the headlines, and a more nuanced story emerges.
In the early months of 2025, the six largest U.S. banks — JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, and Morgan Stanley — quietly withdrew from the United Nations-backed Net-Zero Banking Alliance. BlackRock, the world’s largest asset manager with assets exceeding $10 trillion, soon followed. The Federal Reserve also stepped back from a coalition of central banks focused on climate risk.
This collective exodus appears, at first glance, to be a textbook case of what some are calling “anticipatory obedience” in the Trump era — corporate America preemptively shifting course to avoid becoming targets in the culture wars. It fits a pattern we’ve seen across sectors: tech companies scaling back content moderation, media organizations settling lawsuits with Trump, and corporations dismantling diversity programs.
But is this really a retreat from climate finance — or just a rebranding?
What’s actually happening?
The terminology is changing, certainly. Where “ESG” and “sustainability” were once used, we now see “resilience” and “risk management.” But behind the linguistic shift, policy expert and Open Circuit co-host Katherine Hamilton expects that fundamental business practices may be changing less than the headlines suggest.
“I think the actions are changing far less than the words are changing,” Hamilton said on this week’s episode. “I don’t think there’s anything wrong with changing the words you use. What’s wrong is changing the actions.”
Consider JPMorgan Chase. While it left the Net-Zero Banking Alliance, it simultaneously launched a climate-focused advisory series led by a former NOAA scientist and published detailed analysis on climate risk. The bank isn’t abandoning climate considerations; it’s reframing them from emission reduction commitments to client risk management.
This reframing makes sense, in a way. Banks face increasing legal challenges and regulatory scrutiny from officials who claim ESG targets represent a coordinated boycott of fossil fuel industries. But ignoring the energy transition and climate change itself would represent a real risk to investment. So moving away from politically charged language while continuing similar work under different framing is arguably the sensible approach — assuming their efforts aren’t drastically weakened.
For more of Stephen Lacey’s conversation with Katherine Hamilton and Jigar Shah, listen to the whole episode of Open Circuit:
What’s driving this continued focus on climate, even as the language changes? In a word: math.
“Fifteen years ago we were projecting that all of these risks would materialize in bank portfolios. Today, they’re real,” explained investor and Open Circuit co-host Jigar Shah. “People have vacation homes on the water that they can’t sell. There are entire places in the United States where you can’t get insurance for your home.”
These aren’t hypothetical scenarios for future consideration; they’re balance sheet risks happening now. When these homes can’t secure insurance, should banks continue holding those mortgages? When utilities have to keep rebuilding the grid as extreme weather worsens, what does that mean for their creditworthiness?
Banks can exit climate alliances, but they can’t exit climate reality.
The clean energy investment picture
A recent BloombergNEF analysis offers a sobering metric: to be on a net-zero pathway by 2030, we need to see a four-to-one ratio of investments in decarbonization over fossil fuels. As of the end of 2023, the actual investment ratio didn’t even reach one-to-one — and even that is a slight improvement from previous years. But these figures don’t tell the whole story.
“There are only a very few technologies that are actually covered by the banking sector,” Shah pointed out. “Those are technologies that are fully bankable — so think solar, wind, battery storage, electric vehicles.”
For now, investments in emerging technologies like nuclear, geothermal, advanced materials, and other innovations often come through private equity, innovation funds, and growth capital — and so aren’t reflected in that BNEF investment ratio at all.
And market entry points for new technologies have shifted dramatically; for example, electric vehicles weren’t eligible for standard auto financing securitization until just a few years ago. As technologies mature and gain acceptance in traditional banking, these investment ratios are likely to improve.
“If low-carbon solutions continue improving profitability, this will be the primary factor to unlock financing and investment,” BNEF analyst Trina White told Bloombergin a story on the report.
What’s happening in private equity?
Meanwhile, private equity is going through its own recalibration. BlackRock wrote down its flagship Global Renewable Power Fund, changed leadership, and posted negative returns. Other firms are also cutting costs and marking down clean energy investments.
Is this proof that green investing was all hype? Not quite.
“There was an exuberant couple of years where tourists entered the space and they’re now leaving,” said Hamilton, echoing comments from Scott Jacobs, CEO of Generate Capital. “They just came, poked around, spent some money, left some trash behind and moved on.”
What we’re seeing isn’t a fundamental problem with clean technology as an asset class, but the consequences of inflated valuations during the 2021-2022 wave of market enthusiasm. Many clean energy companies were way overvalued, reflecting wildly optimistic assumptions about how quickly they could reach profitability.
The truth is more mundane, though. These technologies still require time to mature and scale — just like any other infrastructure investment. The disappointment stems not from fundamental business failures but from unrealistic timelines set during a period of market exuberance.
Shah put it bluntly: “They’re trying to blame cleantech as an asset class for their bad decision making. They’re saying, ‘cleantech as an asset class is a bad asset class. We’re the smartest people in the world, and therefore, if we can’t make money on it, that means no one can.’ That’s not true.”
The market correction has created buying opportunities for strategic investors, even as big banks take a step back. For investors with technical expertise and long-term capital, for instance, now is the moment to acquire quality assets at favorable prices.
“Oh my god, it’s extraordinary,” Shah said. “I think there’s nine commercial solar platforms for sale right now.”
Behind these fluctuations in messaging and market sentiment, the fundamental trends for clean energy deployment remain strong. That strength was reflected in the transferable tax credit market, which tripled in value last year.
“When you think about where battery storage is today, it is going to go up 10 times from here because we just basically got started deploying batteries at scale in the last three or four years,” Shah explained. “When you think about solar, it’s still on an exponential curve. Shockingly, we were at 600 gigawatts last year and we’re going to be probably 700, 800 GW next year. It’s nuts.”
Even as investors recalibrate, the underlying trends point to continued growth and integration of climate considerations into the financial mainstream — regardless of what we call it.
“My hope is that clean energy and climate mitigation technologies will just become part of the way we do business,” Hamilton said. “When these technologies are embedded throughout an organization rather than treated as separate initiatives, everyone will eventually just see it as business as usual.”
