Investors Declare Support for Accountability Resolutions
Investors Declare Support for Accountability Resolutions at 8 Financial Institutions • April 24, 2023
Public- and private-sector investors pre-declare support for accountability resolutions at 8 financial institutions and urge other investors to do the same
This year, investors filed 18 resolutions at 8 banks and insurance providers calling for improved climate-related disclosures, adopting science-based targets for 2030, phasing out lending and underwriting to companies engaging in new fossil fuel expansion, and strengthening due diligence policies on Indigenous rights.
These resolutions were filed by several investors, including the New York City Comptroller, New York State Comptroller, Trillium Asset Management, Green Century Capital Management, As You Sow, and the Sierra Club Foundation, among others.
Across the board, shareholder interest in net zero accountability is growing, with 25% of all sustainability-focused resolutions filed this year having a climate-related focus, a 12% increase from last year. This year also saw an increase in the number of climate-related shareholder proposals filed at financial institutions, signaling a growing interest from investors in stronger accountability on climate-related goals.
“Climate risk is a systemic risk that the U.S. financial services industry needs to address to ensure their own solvency and to help prevent the worst outcomes of climate change. Given the central role of banks and insurance companies will play in the green energy transition, it is critical they take these comprehensive steps to ensure the energy sector is not continuing business-as-usual but transitioning to a sustainable future.These resolutions are calling for prudent action by financial institutions to better align their activities with their long-term climate goals.” said Vermont State Treasurer Mike Pieciak.
“Reducing emissions and advancing the transition to green energy is not only necessary for our planet, but essential to the future of our economy. Three of the five NYC pension funds have set ambitious goals for reaching net zero across their investment portfolios by 2040, goals that require concerted action by portfolio companies and fellow investors to advance the transition to a low-carbon economy. Those three funds will support resolutions that ensure financial institutions align their financing with long-term climate goals, and we hope our fellow shareholders join us,” said Brad Lander, New York City Comptroller.
“Large financial institutions, such as JPMorgan, are crucial to reducing emissions ‑‑ that means setting and achieving absolute reduction targets. We are not asking, in our support of the resolutions, to immediately end all fossil fuel financing, we are asking that financial institutions ensure they aren’t financing expansion of fossil fuel development and that they have credible targets and plans to get there. We won’t get to a net-zero economy if we don’t start now,” said Kelly Hirsch, Head of ESG at Vancity Investment Management.
“SCERS applauds the investor community for continuing to highlight the critical role of banks in financing the energy transition. Shareholder proposals are a valuable tool toward decarbonizing the real economy,” said Jeff Davis, Executive Director, Seattle City Employees Retirement System (SCERS)
New York State Comptroller Tom Di Napoli filed exempt solicitations at Citi, Bank of America, Wells Fargo, JP Morgan Chase, Morgan Stanley, and Goldman Sachs, urging shareholders to vote in favor of the fossil fuel phase out resolutions and the absolute emissions targets resolutions. In encouraging investors to support the resolutions, he wrote that “these financial institutions lag peers and fail to meet investors’ climate action expectations” as justification for warranted votes. “Failure to achieve net-zero greenhouse gas emissions by 2050 at the latest and limit global warming to 1.5-degrees Celsius poses enormous risks to the global economy, with estimates of global losses from climate change of 10% of total economic value by mid-century. Financial institutions that continue to finance fossil fuel development are exposing themselves and their investors to material risks associated with the systemic impact of climate change and the transition to a low carbon economy. For example, the Intergovernmental Panel on Climate Change and the International Energy Agency have both predicted that net-zero alignment requires no new fossil fuel supply as of 2021.”
Last week, Legal & General Asset Management, a top 20 shareholder in 4 of the US banks, announced its intentions to support the resolutions on phasing out financing for fossil fuel expansion at all US banks and the resolutions on disclosing transition plans and absolute emissions targets at all banks where the resolutions were filed. In consideration of the need for an orderly and just transition, LGIM said “...boards of financial institutions need to closely consider their strategy and risk appetite towards fossil fuels into the near future. As such, we believe that many of the proposals that ask the board to devise their own time-bound phase-out strategy are supportable.”
Analysis from Ceres and the Transition Pathways Initiative Centre found that none of the US banks have 2030 targets sufficient to align their oil and gas targets with 1.5C pathways. A new Banking on Climate Chaos report found that the 8 North American banks have provided over USD $2 trillion to fossil fuel companies since the Paris Agreement, approximately 29% of which has been provided since 2021, the year the banks joined the Net Zero Banking Alliance. Since 2016, JPMorgan, Citi, Wells Fargo, and Bank of America have consistently been among the top 5 financiers of companies engaging in fossil fuel expansion.
Similarly, insurers in the US lag far behind their European counterparts in their policies on oil and gas, and shareholders are demanding they take action. Travelers, for example, has $4.71 billion in fossil fuel investments, according to the California Department of Insurance as of 2019.
As the Intergovernmental Panel on Climate Change affirmed in its March 2023 report, in order to limit warming to 1.5C, fossil fuel expansion must stop and use of fossil fuels across all sectors must decline sharply. The resolutions filed at the banks and insurance companies provide guardrails and additional assurances that financial institutions are doing their part to facilitate an orderly transition to sustainable energy.
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