Goldman and the end of the climate alliance era

Plus, so much for drill baby drill. Oil production is stalled as Trump takes over

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Goldman Sachs Group’s GS 0.00%↑ departure this week from the Net-Zero Banking Alliance, which was created with great fanfare after the raucous COP26 Glasgow climate summit in 2021, is more than just another defection of a top tier bank from another alliance. It’s a symbol of the end of the era of climate bravado and hype on Wall Street.

Gone are the days when banks and asset managers were spinning out environmental, social and governance (ESG) funds as fast as their marketing departments could promote them and joining high-profile groups to push the world toward an energy transition away from fossil fuels.

That transition is happening anyway, but with a new focus on feeding dramatic increases in energy demand for data centers and AI production. Such increases will be as good — or better — for renewable energy growth as the painful process of twisting arms of companies to divest or reduce their oil and gas use was the last few years.

Wall Street loves a trend, and right now the trend is less regulation and a new gold rush to AI, as risky as that might seem.