Morgan Stanley has become the latest major Wall Street bank to withdraw from a key climate banking coalition, following similar moves by Citigroup and Bank of America earlier this week.

The investment bank announced on Thursday that it would terminate its membership of the Net-Zero Banking Alliance (NZBA), a global group committed to reducing greenhouse gas emissions. The exodus comes amid mounting pressure from fossil fuel-funded Republican politicians in the US, who have targeted such climate initiatives as potential antitrust violations.

"We will continue to report on our progress as we work towards our 2030 interim financed-emissions targets," Morgan Stanley said in an email statement.

The wave of departures has included other major financial institutions, with Goldman Sachs Group and Wells Fargo having already withdrawn from the alliance earlier this month. The moves come against a backdrop of increasing political tension, particularly in Republican-led states.

In a notable development last November, Texas spearheaded a legal action against BlackRock, Vanguard Group and State Street, alleging they had breached antitrust laws by implementing climate-friendly investment strategies that allegedly suppressed coal supply.

Despite leaving the alliance, Morgan Stanley has indicated that it will maintain its commitment to environmental goals. This follows a pattern similar to other departing banks, which have all stressed their continued dedication to their individual net-zero emissions targets and support for clients' carbon reduction efforts.

The bank's exit coincides with its recent adjustment of certain environmental targets. In September, Morgan Stanley modified its plastics-related goals, removing an earlier commitment to facilitate the prevention, removal or reduction of 50 million metric tons of plastic waste by 2030.

The departures have prompted calls for stronger regulation from environmental advocates. Vanessa Fajans-Turner, executive director of Environmental Advocates NY, said: "These exits reveal the inadequacy of voluntary commitments and underscore the urgent need for state-level leadership and regulation."

The NZBA is part of the Glasgow Financial Alliance for Net Zero (GFANZ), which was established over three and a half years ago before the COP26 UN climate conference in Scotland. The organisation has recently adjusted its operating model, allowing members to access guidance without first committing to align their operations with Paris climate agreement goals.

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