On Monday, Wells Fargo became the last of the U.S.’s six largest banks to commit to a carbon neutral future, pledging that all the bank’s operations—including projects and companies it finances—will achieve net-zero carbon emissions by 2050.

“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,” Wells Fargo CEO Charlie Scharf said in a statement.

The announcement from Wells Fargo comes a week after Goldman Sachs and Citigroup made similar pledges. Bank of America, JPMorgan Chase, and Morgan Stanley have all also published net-zero goals over the past six months, to align their operations with the targets of the Paris Agreement.

“Now that six of the top U.S. banks have made this commitment, we expect that others will join in demonstrating that their own financing is in line with the Paris Agreement’s global net-zero climate goal, says Danielle Fugere, president of As You Sow—a nonprofit that advocates for shareholder activism on sustainability issues.

But making the pledge is the easy part; figuring out how to get a bank’s clients on track is a trickier prospect.

Scope 3

For banks, the most crucial aspect of reaching “net zero” isn’t achieving carbon neutrality in their own operations, known as Scope 1 and Scope 2 emissions, but rather ensuring the businesses they finance are carbon neutral too. Wells Fargo says that its own operations are already carbon neutral and have been since 2019.

Monday’s pledge, then, is really about Wells Fargo’s Scope 3 emissions—carbon produced by the bank’s clients—which puts the onus on Wells Fargo customers to chart their own course to carbon neutral operations, or for Wells Fargo to ditch ones that don’t.

“We intend to support our clients through the low-carbon transition and believe that engagement rather than divestment is the fastest pathway to achieving economy-wide net zero ambitions,” Nate Hurst, head of Social Impact and Sustainability at Wells Fargo said.

On Monday, the bank pledged an additional $500 billion to finance “sustainable business” by 2030 and will set and disclose interim emission-reduction targets for “select carbon intensive portfolios” such as those in the oil, gas, and power sectors by 2022. But—apart from pledging to establish an “institute” to “support clients in their climate transitions”—Wells didn’t say how exactly it will hold underperforming clients to account.

“We underscore that a net-zero commitment is only the beginning of this important process,” Fugere says. “We will be looking to Wells Fargo to fill in the details of its climate plans by setting interim targets and transparently reporting progress toward those goals.”

The Big Six

Last year it became common for companies to make bold climate change pledges while promising to follow up with specifics later. The Big Six have proved little different.

On March 2, Citigroup announced it was targeting net-zero emissions by 2050 but didn’t publish an exact plan of how to get there. That plan, CEO Jane Fraser said, will come within the next year.  

On March 4, Goldman Sachs committed to achieving net-zero emissions in its “supply chain” by 2030 and in its financing operations by 2050. According to As You Sow, Goldman Sachs has poured $20 billion into fossil fuel industries each year since the Paris Agreement was signed in 2015. The bank said it would release “interim business-related climate targets” by the end of this year.

In February, Bank of America vowed to disclose its financed emissions by 2023, as part of its new net-zero 2050 pledge, and said it would establish “interim science-based emissions targets for high-emitting portfolios” such as energy and power investments. The bank did not say when those targets would be released.

JPMorgan announced its 2050 commitments in October last year and said it would “begin communicating about its efforts in 2021.” The firm is due to publish the first report from its task force on climate-related financial disclosures soon, promising it in spring 2021.

In September last year, Morgan Stanley pledged to meet net-zero emissions across its industry, including its investments and clients, by 2050. In July, the bank also committed to disclosing emissions generated by its financed industries but has yet to do so. According to the bank’s pledge last year, it is “developing the tools and methodologies needed to measure and manage our carbon-related activities in appropriate ways.”

With fossil fuel industries still providing billions in returns for financiers, it’s no wonder banks want to create a measured way for weaning themselves off carbon. After all, it’s important that the transition to low-carbon economies is profitable in order for it to be sustainable.

Update: This article was updated on March 11 to include comment from Wells Fargo.