Shareholders File Multiple Proposals at U.S. Banks Seeking to Advance Climate-Forward Lending Policies
Bank of America ($BAC), Citigroup ($C), Goldman Sachs ($GS), JPMorgan Chase ($JPM), Morgan Stanley ($MS), and Wells Fargo ($WFC) receive proposals related to their financing of GHG emissions driving climate change.
NEW YORK, NY, TUESDAY, JANUARY 24TH, 2023 - Members of the Interfaith Center on Corporate Responsibility (ICCR) and Harrington Investments today announced that they had filed two shareholder proposals at six of the nation’s top banks to move them toward more climate-friendly policies that better align with their public commitments to net zero by 2050. As You Sow, Harrington Investments, The Sierra Club Foundation (SCF), and Trillium Asset Management are the shareholder proponents.
Phase-Out of Financing New Fossil Fuel Development
One proposal filed by Harrington Investments, Trillium AM, and The Sierra Club Foundation asked all six banks to commit to a time-bound phase-out of new fossil fuel exploration and development. Each of the major banks has publicly committed to aligning its financing with the goals of the Paris Agreement to achieve net zero emissions by 2050, a target widely considered imperative to avoid catastrophic climate impacts and financial losses. Scientific consensus shows that new fossil fuel expansion is incompatible with achieving net-zero by 2050, yet these banks continue to invest billions of dollars each year in new fossil fuel development — a fact corroborated by a new Reclaim Finance report released last week.
Said John Harrington of Harrington Investments, which is leading the filing at Citigroup, “Although the company alleges it is taking steps to mitigate its impact on climate change, records indicate that Citi’s carbon financing has no intention of slowing down. Our proposal, reintroduced for a second year, asks that the company simply agree to phase out lending and underwriting that contributes to new fossil fuel supplies. This request is entirely feasible, and we hope that they will choose to implement the resolution.”
The investors argue that apart from the dangers these financing practices are posing to the planet and people, these incongruities also pose material financial risks to the banks and their shareholders that warrant stronger scrutiny and action.
“In order to avert the worsening impacts of the climate crisis, we must stop the expansion of fossil fuels,” said Dan Chu, Executive Director of the Sierra Club Foundation, which led the filings at JPMorgan Chase, Wells Fargo, Morgan Stanley, and Goldman Sachs. “All major U.S. banks continue to finance billions of dollars for new coal, oil, and gas projects every year. Such financing undermines the banks’ net zero commitments and exposes investors to material risks. These shareholder resolutions simply ask banks to align their promises with their actions and to adopt policies to phase out the financing of new fossil fuel development. We have actively engaged with bank leadership so they are clear about what investors expect from their banks, and we anticipate strong levels of support this spring from fellow investors.”
A slate of similar proposals was filed by the same investors at the banks in 2022 and received between 8-13% support at annual meetings. The 2023 proposal has been updated to clarify that the proponents are requesting a policy to phase out the financing of new fossil fuel exploration and development, rather than abruptly ending client relationships, as some banks claimed the previous year. The resolution encourages banks to finance clients’ low-carbon transition so long as those plans are credible and verified. Proponents believe these updates will significantly boost shareholder support.
“The banks’ objection to the language of last year’s proposal was that it would cut off clients immediately and prevent banks from financing the net-zero transition, insofar as they couldn’t support companies that may have low-carbon transition plans but are still involved in oil and gas development,” said Paul Rissman of the Sierra Club Foundation. “This year’s proposal encourages banks to finance companies that are certified by a credible third party to be on a net zero pathway while maintaining that financing for new fossil fuels is incompatible with the banks’ climate commitments.”
Last year’s resolution was supported by several large funds, including the New York State Common Retirement Fund, which filed this exempt solicitation at all six banks.
Said Kate Monahan of Trillium Asset Management, which led the filing at Bank of America, “The IEA’s warnings are clear—we will not be able to achieve the Paris Agreement’s goal of limiting warming to 1.5 degrees if banks continue to finance new fossil fuel exploration and development. Bank of America has publicly committed to the Paris Agreement but continues to finance fossil fuel expansion with no phase-out plan, exposing itself to accusations of greenwashing and reputational damage. By continuing to fund new fossil fuels, Bank of America and others are taking actions with potentially catastrophic consequences.”
Climate Transition Planning
Another proposal filed at JPMorgan Chase, Wells Fargo, Bank of America, Morgan Stanley, and Goldman Sachs requests “a report disclosing a transition plan that describes how it intends to align its financing activities with its 2030 sectoral greenhouse gas emissions reduction targets, including the specific measures and policies to be implemented, reductions to be achieved by such measures and policies, and timelines for implementation and associated emission reductions.”
"Investors seek to understand that each bank has a plan in place to achieve its 2030 targets rather than simply relying on outside factors such as clients’ actions or low-carbon technology developments," said Danielle Fugere, President of As You Sow, who led these filings. "An effective transition plan describes the strategies, milestones, and timelines to deliver on decarbonization targets and ensure investors that the bank is addressing and is accountable for the risks associated with its decisions related to the financing of high-carbon activities."
As You Sow filed additional proposals at insurers Berkshire Hathaway and Chubb requesting that they “measure, disclose and reduce GHG emissions associated with underwriting and investing activities, in alignment with the Paris Agreement’s 1.5-degree goal."
"The financial services sector has an important role to play in addressing the growing climate crisis. More than six of the largest U.S. banks have taken responsibility for setting targets for their financed emissions. We now look to insurers to begin taking responsibility for their own contributions to climate change," added Fugere.
Another ICCR member, Green Century Fund, announced in December 2022 it had filed resolutions at insurance companies Chubb, The Hartford, and Travelers asking all three to phase out underwriting new fossil fuel projects.
Again, all the proposals are available at this link.
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 to foster greater corporate accountability. Visit our website www.iccr.org and follow us on Twitter, LinkedIn, and Facebook.