When a group of climate activists met with Wells Fargo’s chief sustainability officer last November, they were prepared for plenty of promises and talking points. But they came away even more disappointed than usual in the bank’s level of commitment to its net-zero goals.
The bank is the world’s fifth-biggest financier of fossil fuel production, as of 2023, with nearly $300 billion in investments in oil and gas and coal since the Paris Agreement in 2016. Wells Fargo also has been spotlighted for its limited investment in renewable energy compared to its competitors and was one of the last major banks to commit to achieving net-zero greenhouse gas emissions by 2050.
Yet Deborah McNamara and her team at the activist coalition Climate Voice were looking forward to making some progress during their call with Robyn Luhning, Wells Fargo’s chief sustainability officer and a rising star in the sector who was named No. 7 in Sustainability magazine’s list of the top 100 women in sustainability for 2024. During the meeting, McNamara said she raised concerns about the bank’s performance on achieving its climate goals and had a long list of questions about its plans to transition away from fossil fuel financing.
Though the call was cordial, any expectations the Climate Voice representatives had for achieving common ground with the banking giant were quickly dashed.
Luhning said that the bank was making a $500 billion sustainable finance commitment by 2030, is the third largest issuer of green bonds, has a budget for sustainable philanthropy, and is “trying to move from words to action,” according to McNamara. But when asked whether she felt “confident” that Wells Fargo was on track to meet its net-zero goals, Luhning didn’t answer. “That is something that stuck with me,” McNamara said, noting that Luhning flatly replied no when asked about any immediate reduction in fossil fuel financing. “She actually said that investments would increase if fossil fuel companies are making emissions reduction commitments.”
When asked, McNamara said that Luhning said that she could not provide a ratio between the bank’s renewable energy investments and its fossil fuel investments, a common metric in transition finance, explaining that “I don’t have those numbers.”
“Despite the goals that Wells Fargo has set, they appear to be going in a completely different, opposite direction when it comes to increased emissions relative to their fossil fuel financing decisions,” said McNamara, who has also led discussions with other major banks over their fossil fuel financing.
Six months later, Luhning quit her high-profile position and is looking for new opportunities. She did not respond to repeated requests for comment to Capital & Main about her decision to leave the bank or her conversation with the Climate Voice team. But former co-workers, who requested anonymity because they said their current employment could be jeopardized, said that Luhning left in frustration at the bank’s lack of commitment to sustainable finance and its net-zero goals.
“She was disenchanted with the way her unit was being valued at the bank,” said a longtime banker at Wells Fargo. “Sustainable finance is basically an arm of the marketing department and is not taken seriously in terms of getting the top people and getting real money to invest. It’s not surprising to me that a lot of people are going to cycle in and out of those roles, because until that structurally changes, they’re not going to be able to achieve the mission.”
When it came to controversial fossil fuel projects such as the Dakota Access Pipeline and the Enbridge Pipeline’s Line 3 extension, the bank’s environmental, social and governance (ESG) unit has recommended that Wells Fargo refrain from investing. “Calling this loan to Enbridge sustainable finance is practically greenwashing if you look at the overall impact,” said a former Wells staffer who asked to remain anonymous since the former staffer is still a banker vulnerable to retaliation in the close-knit sector.
Canadian energy giant Enbridge’s Line 3 pipeline replacement, which winds its way through wetlands and tribal lands by the Mississippi headwaters in northern Minnesota, has attracted protests for years, as well as shareholder resolutions calling on Wells Fargo, Bank of America, JPMorgan and other banks to stop financing the project. Back in 1991, Enbridge was responsible for the largest inland oil spill in U.S. history, when Line 3 spilled more than 1.7 million gallons of tar sands oil on a frozen river.
But Wells Fargo’s ESG team was overruled in both cases by the commercial side of Wells Fargo, said the staffer and a former banker on the sustainable finance team who also asked not to be identified for job security reasons. “We prepared these reports and then they just went ahead and made those deals.”
“When that happens, disillusionment creeps in — what am I doing here?” said the former banker, who left Wells Fargo at the start of 2023.
A spokesperson for Wells Fargo did not comment on the departures but said in a statement:
“Wells Fargo established climate-related goals in March 2021, and we are taking steps to pursue our climate and sustainability-related business objectives and support customers in their transition to a lower carbon economy.”
The bank also says that it has deployed $178 billion of sustainable finance from 2021 to 2023, ahead of its goal of providing $500 billion in such finance by 2030, as detailed in its Sustainability and Governance Report.
As described, the situation at Wells Fargo is indicative of the state of sustainable finance at leading banks — increasingly squeezed on the one hand between climate activists who accuse the banks of greenwashing by using loopholes to get around net-zero commitments and, on the other hand, an aggressive anti-ESG movement that has seen powerful lawmakers threaten to withdraw billions of dollars in investments. The tension is having an impact, with cutbacks at some banks’ sustainable finance units and a 89% decline in net inflows to sustainable funds from $161 billion in 2022 to $63 billion in 2023.
That decline comes amid a boom in renewable energy capacity, which grew by 50% in 2023, and major advances in clean-energy technology sparking a record $1.8 trillion in investment last year.
Wells Fargo, Charles Schwab and Citibank are just some of the banks that had staffers quit their sustainable finance teams in recent years. In addition, Barclays cut eight bankers, including those with expertise in carbon capture and hydrogen, from its energy transition and sustainable banking teams. And UBS saw the departure of some of its senior executives responsible for sustainable investing.
Financial firms are also leaving global alliances that focus on finding common ground to achieve net-zero goals, such as the Net Zero Banking Alliance, Net Zero Asset Managers Initiative and ClimateAction 100+. In March, Wells Fargo joined the three other biggest U.S. financiers of fossil fuel activity — Citibank, Bank of America and JPMorgan Chase — in exiting the Equator Principles, which was launched in 2003 to help banks assess the environmental and social impacts of projects they finance. Additionally, the CEOs of Bank of America, BlackRock and Deutsche Bank are among those that are skipping the U.N.’s COP29 climate change summit in Azerbaijan in November, despite its emphasis this year on finance issues.
All of this comes as the climate crisis continues to grow in urgency, with greenhouse gas concentrations, global land and ocean temperatures and global sea levels all reaching record highs in 2023. A recent survey of authors who have contributed to Intergovernmental Panel on Climate Change (IPCC) reports showed that most doubt the world will achieve its climate targets by 2050.
‘The Disillusionment Kicks In’
That disconnect between the worsening crisis and the reluctance of banks to seriously reduce their financing of fossil fuel production is leading some climate-concerned bankers to leave their jobs.
“If you really care about these things, you start to notice that the IPCC is issuing more and more dire warnings every year,” said Tariq Fancy, the former chief investment officer of sustainable investing at BlackRock. “And the companies they’re working for are doing all these green things that seem to not be changing that much, but they’re also killing it on profits. So, the disillusionment kicks in.”
Fancy made headlines when he left BlackRock in late 2019 with a series of hard-hitting op-eds that accused Wall Street of “greenwashing the financial world, making sustainable investing merely PR, which is a distraction from the problem of climate change.”
Since Fancy quit BlackRock, he often gets emails and messages from fellow bankers inspired by his example and leaving their jobs out of disillusionment — or venting anonymously because they fear the repercussions of expressing their views in public.
A key to banks’ lack of resolve is that sustainable finance is not taken seriously compared to other growth sectors such as artificial intelligence, Fancy said. “It’s presented to the world as being an investment function, that serious money is involved. And in practice, what I realized, when you see the budgets that they’re allocating and the approach they’re taking, is that it’s more like an arm of their public relations team. Especially in comparison to something like a unit that’s focused on AI investing, where there’s real money and they put a lot of work into it and there’s significant risk if they don’t do it as fast as their competitors.”
That disconnect between words and action has led some bankers to be more sympathetic to the concerns of climate activists, who often hold loud protests outside their headquarters.
This past summer, Alice Hu was one of the lead organizers of the “Summer of Heat” protests that targeted banks for their fossil fuel financing. Many of their protests outside Citbank’s headquarters in downtown Manhattan were confrontational, and most of the bankers “tried to ignore us,” she said. But during one of their quieter protests, when people stood silently with poster boards declaring “Oil = death,” “There were actually bankers who came up quietly and said, ‘I support what you are doing,’” Hu recalled.
A former Citi banker came to one of the training sessions for their campaign, Hu said. “He told us that he used to work at Citi and quit in part because two years ago, in April 2022, activists had gone inside the bank building’s lobby to engage in civil disobedience. He took a flier, and that was the impetus for him to make a career change. He told us, ‘Keep doing this!’”
