Adopt GHG Reduction Targets for Lending/Investment Activities

Resolution Text

Whereas: The Intergovernmental Panel on Climate Change says global greenhouse gas (GHG) emissions must be cut in half by 2030 to achieve net zero by 2050 and meet the Paris Agreement’s goal to limit warming to 1.5 degrees Celsius and avoid the worst impacts of climate change. At current emissions trajectories of 3 degrees of warming, an estimated 10 percent of global economic value could be lost by 2050.1

Banks play a critical role in limiting global temperature rise and may face serious business risks associated with financing projects or companies that lack alignment with the Paris Agreement’s goals. Financing high-emitting activities poses systemic risks to the global economy, portfolio-wide risks to diversified investors, and serious risks to banks’ own operations.

Bank of New York Mellon (BNY Mellon) services clients in the fossil fuel sector, most notably as administrative agent for a multi-year revolving credit facility for Southwest Gas.2 While BNY Mellon has set Scope 1 and 2 reduction targets in line with Science Based Targets initiative methodology, the Company does not yet measure or disclose the carbon footprint associated with its lending or investment activities, nor has it adopted targets to reduce these emissions. Research shows that, on average, financed emissions can be 700 times greater than financial institutions’ direct emissions,3 indicating that the Company is addressing a fraction of its climate impact.

Competitors have taken steps to mitigate their risk. Asset managers, including BlackRock and Vanguard, have set interim GHG targets for their investments through the Net Zero Asset Managers initiative. Banks like Wells Fargo and Citigroup have set targets to reduce their financed emissions associated with sectors like energy and power generation.

Investors applaud the progress made by BNY Mellon subsidiaries, Insight and Newton, which set interim targets through the Net Zero Asset Managers initiative, but remain concerned that the Company has not made similar enterprise-wide commitments.4

Resolved: Shareholders request BNY Mellon set near- and long-term GHG emission reduction targets for its high-emitting lending and investment activities, aligned with the Paris Agreement’s 1.5-degree goal, and report on progress annually.

Supporting Statement: Proponents recommend the following, at the Board’s discretion:

Disclosure of the Scope 3 emissions, starting with those associated with the Company’s lending and investment activities for high-emitting sectors;

A commitment to reach net zero by 2050 or sooner;

A near-term (2030 or sooner) target for highest-emitting sectors, with a commitment to update this target every 5 years;

Consideration of approaches used by advisory groups like the Partnership for Carbon Accounting Financials and the Science Based Targets initiative. Emissions from underwriting should be accounted for in the Company’s disclosure and target-setting once methodologies become available;

Annual report on progress

1 https://www.swissre.com/institute/research/topics-and-risk-dialogues/climate-and-natural-catastrophe- risk/expertise-publication-economics-of-climate-change.html
2 https://www.prnewswire.com/news-releases/southwest-gas-corporation-issues-600-million-of-4-05-debt-due- 2032–301508848.html
3 https://www.cdp.net/en/articles/media/finance-sectors-funded-emissions-over-700-times-greater-than-its-own
4 https://www.netzeroassetmanagers.org/media/2022/07/NZAM-Initial-Target-Disclosure-Report-May-2022.pdf