The Role of Major U.S. Banks in a Just Transition to a Net-Zero Carbon Economy

THURSDAY, APRIL 20^TH AT 12 PM ET – 1 PM ET

WHAT: This media briefing will include a brief presentation by shareholders of climate-related proposals on the proxy at U.S. banks and insurance companies. Following the discussion of the proposals, there will be a Q&A for members of the press.

WHEN: 12 pm – 1 pm ET on Thursday, April 20th

WHERE: The virtual media briefing will be held on Zoom. Please register at this link: https://us02web.zoom.us/webinar/register/WN_9McPkBlJS1uM53pi_hX1fw#/registration

WHO: Speakers will include:

Christina Herman, Sr. Program Director for Climate and the Environment, ICCR: Introduction;

• Danielle Fugere, President, As You Sow: Transition planning proposals at Bank of America ($BAC); Goldman Sachs ($GS); JPMorgan Chase ($JPM); Morgan Stanley ($MS); and Wells Fargo ($WFC) and insured emissions reduction proposals at Travelers ($TRV); Berkshire Hathaway ($Berk-A), and Chubb ($CB);
• Mary Beth Gallagher, Director of Engagement, Domini Impact Investments: Proposal on Free Prior and Informed Consent at Chubb ($CB);
• Michael Garland, Assistant Comptroller for Corporate Governance and Responsible Investment at New York City Comptroller’s Office: Absolute emissions proposals at Bank of America ($BAC); Goldman Sachs ($GS); and JPMorgan Chase ($JPM);
• Andrea Ranger, Shareholder Advocate at Green Century Funds: Fossil fuel underwriting proposals at Travelers Cos Inc. ($TRV); and The Hartford Financial Services Group ($HIG);
• Paul Rissman, Board Member, Sierra Club Foundation: Fossil fuel expansion proposals at Goldman Sachs ($GS); JPMorgan Chase ($JPM); Morgan Stanley ($MS); and Wells Fargo ($WFC);
• Natalie Wasek, Associate Director, Seventh Generation Interfaith Coalition for Responsible Investment: Climate Lobbying Proposal at Wells Fargo ($WFC).

See the full list of proposals and related proxy exempt solicitations here. 

MORE: Read our press release about the US bank shareholder proposals here. See ICCR’s Proxy Resolutions and Voting Guide here. Learn more about the big U.S. banks’ outsized role in fossil fuel financing in the annual Banking on Climate Chaos report here.   View the slide deck from the briefing here. Listen to the briefing recording here (Passcode: #3u=8svF).

DATES: The following annual meetings will happen on these dates, with in-person locations included where applicable:

• April 25: Citi, Wells Fargo, and Bank of America
• April 26: Goldman Sachs AGM (Dallas, Texas, US)
• May 16: JPMorgan Chase
• May 17: Chubb
• May 19: Morgan Stanley
• TBD: Likely May 16 for The Hartford and May 24 for Travelers

Supply disruptions resulting from the Ukraine invasion highlight the need to transition to renewables and build energy independence.

NEW YORK, NY, MONDAY, MARCH 28th, 2022 –Shareholders are announcing that proposals they filed for the 2022 proxies of U.S. and Canadian banks will go to a vote at company annual meetings this spring despite SEC challenges by three of the banks. 

Shareholders at top U.S. banks — Bank of America ($BAC), Citigroup ($C), Goldman Sachs ($GS), JPMorgan Chase ($JPM), Morgan Stanley ($MS), and Wells Fargo ($WFC) — and Canadian banks, Bank of Montreal and TD Bank, will vote on proposals requesting financing consistent with the IEA net-zero 1.5^oC scenario. The proposals at U.S. and Canadian banks call for banks to adopt policies by year-end committing to steps to end financing for new fossil fuel development, in alignment with the International Energy Agency (IEA) conclusion about the pathway to achieving net-zero emissions by 2050. Two additional proposals filed with Royal Bank of Canada ask (1) for the bank to update its criteria for “sustainable finance” to preclude fossil fuel activity and projects facing significant opposition from Indigenous Peoples, and (2) for a policy to preclude the privatization of heavily polluting assets.

Similar proposals raising concern about the IEA’s net-zero scenario were filed with major insurance companies Chubb, The Hartford, and The Travelers. While all three companies challenged the proposals, we have just learned that the proposal at Chubb will advance to a vote. Insurance companies face a double whammy of impacts from climate change, including steadily increasing insured losses from increasingly destructive and unpredictable climate-driven natural disasters. Insurance companies also face the portfolio and reputational risks faced by large banks.

While Citigroup, JPMorgan Chase, and Morgan Stanley all sought relief from the SEC to have the shareholder proposals omitted from their proxies, the resolutions survived the challenges and will advance to a vote at annual meetings this spring. Bank of America, Wells Fargo, and Citigroup will all be holding their annual general meetings on the morning of April 26th. Goldman Sachs will meet on April 28, 2022. JPMorgan Chase and Morgan Stanley have yet to announce the timing of their meetings.

These banks are among the world’s largest funders of the fossil fuel industry: the top six U.S. banks alone provided more than $1 trillion in fossil fuel financing in the years following the Paris Agreement (2016-20), and JPMorgan Chase, Citi, Wells Fargo, and Bank of America have been the largest fossil fuel bankers in the world by a wide margin. In the wake of pressure from investors and other stakeholders, all the banks have now made commitments to achieve net-zero financed emissions by 2050 and have joined the Net-Zero Banking Alliance.

“Public commitments to net-zero by bank executives are frankly meaningless based upon their current financing of fossil fuels. What the banks call their commitments are simply statements that cannot be mandated or enforced by current corporate law or legal statute and represent no change in corporate policy,” said John Harrington of Harrington Investments, Inc., the lead filer of three shareholder resolutions, who narrowly escaped and lost his home to the climate change-induced Atlas Fire in Napa County, California, in October 2017.

The war in Ukraine has been cited as a reason to expand oil and gas production, but the global average time from discovery to first production is 5.5 years for conventional oil[1], so additional fields will have no impact on short-term oil prices. To the contrary, disruptions to supply from the conflict highlight the need to achieve energy independence by moving quickly to renewables, electrification, and greater energy efficiency.

In their public statements and disclosures, the banks have stated that they seek to align their net-zero commitments with science-based models, including frameworks and methodologies from the International Energy Agency (IEA) and the Net-Zero Banking Alliance led by the United Nations Environment Programme Finance Initiative (UNEP FI). The shareholder proposals are asking that the banks fulfill the recommendations for credible net-zero commitments issued by the UNEP FI and the IEA Net-Zero by 2050 Roadmap report, which clearly stated that investing in new fossil fuel development is not aligned with 1.5°C.

“Committing to align with the IEA and UNEP FI frameworks but failing to fulfill their recommendations will invite accusations of greenwashing, a clear reputational risk for the banks,” said Kate Monahan of Trillium Asset Management. “In underwriting projects that are inconsistent with the IEA and UNEP FI guidance, the banks run a risk of loading potential stranded assets onto their clients’ balance sheets – potentially leading to litigation risk. We should know whether the banks’ lending and underwriting policies are consistent with their net-zero commitments.”

Investors are also concerned about the risk to the larger economy from a failure to hold warming to a 1.5^oC increase. “Climate change is a global crisis causing long-term consequences that drastically impact people and communities. We need urgent, concrete action that will limit the harm of climate change and protect people and planet,” said Mary Minette of Mercy Investment Services. “Banks play a critical role in this crisis and need to take accountability for the role their financing of the fossil fuel industry plays in perpetuating climate change.”

The Net-Zero Banking Alliance, to which all the major U.S. and Canadian banks have signed on, recently stated that it “does not support the financing of fossil fuel expansion”. The Alliance “encourages members to conduct client engagement and education as the primary tool for engendering real-economy impact. This is partly accomplished via target-setting. … To achieve these targets, banks will … need to engage with clients, shareholders, and with their own firms to educate, share priorities, gain alignment, and assess operations. Additionally, while portfolio targets will provide concrete metrics for banks to aim for, banks will ideally supplement targets with sector policies that broadly support clients’ transition,” according to guidance provided by the NZBA.

“All of these banks claim to value innovation and sustainability, but with their continued investment in fossil fuel expansion, they’re failing to live up to those values or to their own stated commitments to climate action,” said Paul Rissman, a member of the Sierra Club Foundation board of directors. “These resolutions aren’t calling for anything the banks haven’t already publicly committed to do; in order to achieve the targets they’ve set out, they must make a plan to phase out their support for fossil fuels and invest in a clean energy future.”

See the list of climate finance proposals going to a vote during the 2022 proxy season

About the Interfaith Center on Corporate Responsibility (ICCR)
Celebrating its 51st year, ICCR is the pioneer coalition of shareholder advocates who view the management of their investments as a catalyst for social change. Its 300-member organizations comprise faith communities, socially responsible asset managers, unions, pensions, NGOs, and other socially responsible investors with combined assets of over $4 trillion. ICCR members engage hundreds of corporations annually in an effort to foster greater corporate accountability. Visit our website www.iccr.org and follow us on Twitter, LinkedIn , and Facebook.

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A failure to publish the complete findings of the assessment has investors wondering about the integrity of the process and whether any learnings gleaned will inform much-needed reforms. 

NEW YORK, NY – MONDAY, MARCH 14^TH, 2022 –  Shareholders in Wells Fargo who have been engaging the company for two decades around practices with the potential to harm stakeholders and customers, today announced their response to the company’s publication of a summary of its Human Rights Impact Assessment (HRIA).

The document was developed in response to shareholders’ call for an HRIA in alignment with the UN Guiding Principles on Business and Human Rights (UNGPs) to assist the company in identifying potential human rights harms impacting its key stakeholders, primarily WF customers, as a result of the company’s numerous and very public ethical and oversight lapses.

Wells Fargo agreed to undertake the assessment and hired an independent consultant, Foley Hoag, to assist in the process.

The investors say the document Wells Fargo delivered – a topline summary, not a full HRIA – falls dramatically short of their expectations. Not only is the information incomplete, but there is also no transparency about the due diligence process undertaken and no way of confirming whether all the recommendations made by Foley Hoag are being considered. Critically absent from the document, say investors, are the voices of Wells Fargo stakeholders who have suffered human rights harms.

Said Sr. Nora Nash of the Sisters of St. Francis of Philadelphia who leads ICCR’s engagement with Wells Fargo, “We encouraged the company to identify and assess the most salient human rights risks across its enterprise. Unfortunately, the final report did not identify the salient human rights impacts, was not grounded in an international human rights framework, and its process lacked the voice of stakeholders. Candidly, we couldn’t be more disappointed.” 

ICCR members have been raising concerns about egregious ethical and cultural lapses at Wells Fargo since 2001 including the filing of shareholder proposals citing predatory and discriminatory lending practices, the marketing of credit cards to subprime consumers, and the fraudulent opening of credit card accounts for millions of its customers. These practices resulted in over $1 billion in fines from the Consumer Financial Protection Bureau and, investors argue, reputational damage that is of material consequence for shareholder value.

A 2017 resolution filed by ICCR members resulted In the publication of Wells Fargo’s Business Standards Report which, according to Wells Fargo, was intended to “improve our culture, make things right for customers who were harmed, transform our organizational structure and business practices, increase transparency, and strengthen risk management and controls.”

Said Cathy Rowan, representing the Maryknoll Sisters, “Wells Fargo speaks of its commitment of always ‘looking forward by finding solutions and removing barriers to help our customers’. We do not feel that the solutions described in the HRIA sufficiently recognize the bank’s obligation to uphold and respect the rights of stakeholders, nor indicate how these solutions will remove the barriers that have caused harm. We don’t see this as a good sign that Wells Fargo has reformed and learned from its past mistakes.”

The most critical failure of the document say investors, is the absence of the impacted stakeholder voice which is foundational for an impact assessment based on the UNGPs.

Said David Schilling, ICCR’s Senior Advisor, “This product, regrettably, will not empower the rights-holders who were interviewed in this process to hold the company to account. Not only is it a disservice to the individuals who spent their time and emotional energy sharing their stories and perspectives on the harms they have suffered as a result of Wells Fargo’s practices, it is a missed opportunity for Wells Fargo to reform its business and join leading companies that have done serious impact assessments.”

“Wells Fargo has not changed its behavior as is now flouting the CARES Act for federally backed loans and is failing to properly comply with GSE and FHA loss mitigation guidelines for borrowers negatively by Covid-19,” said Beth Jacobson, a former Wells Fargo employee who now advocates for impacted customers. “How many borrowers must lose their homes due to Wells Fargo’s putting profits above human rights?”

In a separate engagement, investors requested that Wells Fargo conduct a racial equity audit but the company argued the audit wasn’t necessary because it had already agreed to the HRIA. ICCR members say that this argument is another example of how the company is skirting responsibility for the due diligence necessary to ensure stakeholders aren’t harmed.

Observed Nash, “A retail bank with a footprint as vast as Wells Fargo needs to put its customers first because when it doesn’t it can have powerful impacts on families, communities and, more broadly, on our country’s economy. From my experience working with impacted customers who either lost their homes or were financially devastated due to unfair loan modifications, it is clear Wells Fargo has not recognized the economic and emotional toll it has taken on customers. An authentic human rights impact assessment shouldn’t be a one-off, but rather an ongoing evaluation that allows companies to ensure the rights of their stakeholders are respected and prioritized.”

CONTACT:
Susana McDermott
Director of Communications
Interfaith Center on Corporate Responsibility
201-417-9060 (mobile)
smcdermott@iccr.org

About the Interfaith Center on Corporate Responsibility (ICCR)
Celebrating its 51st year, ICCR is the pioneer coalition of shareholder advocates who view the management of their investments as a catalyst for social change. Its 300-member organizations comprise faith communities, socially responsible asset managers, unions, pensions, NGOs and other socially responsible investors with combined assets of over $4 trillion. ICCR members engage hundreds of corporations annually in an effort to foster greater corporate accountability. Visit our website www.iccr.org and follow us on Twitter, LinkedIn and Facebook.

To highlight the critical role of bank lending in the climate crisis, a group of institutional investors coordinated by the Interfaith Center on Corporate Responsibility (ICCR) announced they have filed a slate of nine proposals at top U.S. banks for their 2022 proxies calling for greater accountability in climate lending.

The pivotal role of capital flowing through the financial services sector in reining in GHG emissions and facilitating the rapid transition to clean energy has long been a focus of institutional investors in the ICCR network, as well as regulators, policymakers, and civil society organizations.

ICCR members engaged top banks on their climate lending last year and were successful in getting the banks to act on a variety of climate-related proposals, from setting a policy restricting lending for coal and Arctic drilling, to adopting commitments for net-zero financed emissions by 2050. While gains have been made, to reach net-zero by 2050, the investors caution that banks need to set strong interim targets now.

In 2021, the International Energy Agency (IEA) found that in order to ensure global warming of no higher than 1.5 degrees Celsius by 2100 and net zero emissions by 2050, “there is no need for investment in new fossil fuel supply.”  While most of the banks have adopted a net-zero commitment, none has committed to halt financing for all new fossil fuel development as is required by a net-zero commitment.

Citigroup Inc.’s Chief Executive Jane Fraser, speaking at The Wall Street Journal’s CEO Council Summit on Tuesday, conceded that the bank may have to cut off some clients to meet its climate goals. “At the end of the day that will mean there are some choices as to which clients we will be serving and which ones we won’t be,” Ms. Fraser said. “One-size-fits-all won’t work for that.”[i]

The 2022 filings are at the same group of U.S. banks that were engaged in 2021: Bank of America ($BAC), Citigroup ($C), Goldman Sachs ($GS), JPMorgan Chase ($JPM), Morgan Stanley ($MS), and Wells Fargo ($WFC). All the banks received a proposal requesting Financing Consistent with the IEA Net-Zero 1.5^o Scenario, and additional proposals were filed at both Bank of America and Citigroup requesting an Audited Report on Impact of IEA Net-Zero Emissions by 2050 Scenario and at JP Morgan Chase requesting a Report on Absolute Emissions Reduction Aligned with the IEA Net-Zero Emissions by 2050 Scenario.

The Financing Consistent with the IEA Net-Zero 1.5 ^o Scenario resolution asks banks to ensure their financing does not contribute to new fossil fuel supplies as required by the IEA Net-Zero Emissions by 2050 scenario. The Audited Report on Impact of IEA Net-Zero Emissions by 2050 resolution asks for an audited report on whether and how the fulfillment of the IEA Net-Zero Emissions by 2050 Scenario could affect underlying assumptions in financial filings. The Report on Absolute Emissions Reduction Aligned with the IEA Net-Zero Emissions by 2050 scenario resolution asks for a report setting absolute contraction targets for banks’ financed greenhouse gas emissions and addressing the lack of need for new fossil fuel development.

“We are rapidly running out of time to reverse climate change,” said Mary Minette of Mercy Investment Services, which filed the IEA Net-Zero Scenario proposal at JPMorgan Chase “Although JPMorgan Chase has pledged to reach net zero in its financed emissions by mid-century, the bank consistently ranks among the highest sources of funds for fossil fuel companies.  The IEA tells us that keeping temperature rise below 1.5 degrees depends on a sharp decline in new exploration and production of coal, oil, and gas; investors are calling on the bank to clearly state that goal for their fossil fuel clients.” 

The complete list of 2022 filings with U.S. banks on climate lending and lead proponents can be found here.

Dan Chu, Executive Director of the Sierra Club Foundation which led several of the bank filings said, “Major banks like Citigroup acknowledge their high exposure to climate risk, and yet have not changed their lending policies to mitigate that risk. The IEA is clear that limiting warming to 1.5 degrees Celsius and averting the worst impacts of the climate crisis means stopping the expansion of fossil fuels immediately. If banks fail to adjust their practices accordingly, it will present enormous risks to our communities, our economy, and banks’ own profitability.” 

“As the world’s largest source of finance, bank lending can profoundly impact climate outcomes,” said Jonas Kron of Trillium Asset Management, which is leading the filing seeking a no financing of new fossil fuel supplies policy at Bank of America. “Banks bear enormous responsibility for which projects move forward and which don’t. In short, bank lending has the power to heavily influence our progress addressing climate change. The IEA has made it clear that there is no need for investment in new fossil fuel supply if we are to meet net zero emissions by 2050—we are here to encourage Bank of America to take the steps necessary to meet that goal.”

“Climate change, driven by fossil fuel bank financing, continues to increase global natural disasters, taking lives and destroying thousands of properties and homes, by floods, hurricanes, droughts, and wildfires,” said John Harrington, President of Harrington Investments. “As someone who lost everything, and who along with my wife barely escaped with our lives in the Atlas Wildfire in Napa County, California in October 2017, I know the personal impact of today’s climate change literally fueled by bank financing. Climate change is an existential global threat to all stakeholders. I ask shareholders to support our proposals to force these banks to commit to protecting our environment, properties, livelihoods, lives, and the very earth we all inhabit.”

About the Interfaith Center on Corporate Responsibility (ICCR)
Celebrating its 50th year, ICCR is the pioneer coalition of shareholder advocates who view the management of their investments as a catalyst for social change. Its 300-member organizations comprise faith communities, socially responsible asset managers, unions, pensions, NGOs, and other socially responsible investors with combined assets of over $4 trillion. ICCR members engage hundreds of corporations annually to foster greater corporate accountability. Visit our website www.iccr.org and follow us on Twitter, LinkedIn , and Facebook.

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