With annual shareholder meetings for major U.S. banks looming, climate-minded activist shareholders just got a powerful ally in their corner.
New York State Comptroller Tom DiNapoli and the state retirement fund — the nation’s third largest pension program, with over $280 billion in assets — will support resolutions calling for the six largest publicly-traded banks to stop financing fossil-fuel expansion, DiNapoli’s office and other groups said Tuesday.
The New York State Common Retirement Fund has filed an exempt solicitation with the Securities and Exchange Commission expressing its intent to stand with shareholders pushing this change. New York State’s filing outlines the rationale for voting in favor of resolutions at Citigroup
Bank of America
and Goldman Sachs
“This is big leadership by New York State — as all eyes are on these critical climate votes. Big banks are worsening climate change with continued financing of fossil fuel companies,” said Richard Brooks, climate finance director with Stand.earth, an advocacy formed in 2000 that targets corporate policies and federal laws.
A report out earlier this year charges that the top 60 banks have pumped more than $4.6 trillion into fossil fuel companies since the voluntary Paris Climate Agreement was adopted in 2016. That pact called for capping global warming to 1.5 degrees Celsius, and at most 2C degrees. Recent warnings from the U.N.’s climate panel say country-level and corporate actions are moving too slowly to hit emissions targets.
The shareholder resolutions at the top U.S. banks urge them to adopt policies by year-end to ensure that a firm’s lending and underwriting do not contribute to new fossil-fuel development. The involved shareholders say such a move is consistent with achieving the International Energy Agency’s net-zero emissions by 2050 scenario. The IEA, an energy industry watchdog that historically came down in favor of broader industry interests, surprised many last year when it explicitly called for no new drilling.
Luring large institutional investors on board could be a major win for shareholders who face an uphill climb during busy proxy seasons, yet have made some breakthroughs in holding corporations accountable to environmental issues.
Pension funds are major institutional shareholders of banks and can have considerable influence over their business practices. A recent analysis from advocacy Stand.earth showed 14 U.S. public pensions have over $60 billion invested in the top fossil-fuel financing banks.
In all, more than a dozen climate-related resolutions have been filed at major U.S. and Canadian banks.
The SEC filing by New York’s pension fund is also a signal for other pension funds and institutional investors that hold shares in the banks to vote in favor of these resolutions, proponents for such action argue.
Already, leading U.S. pension plans, and college and corporate endowments, have gotten away from direct holdings in traditional energy. Famously, climate activist hedge fund Engine No. 1 pushed its way onto the ExxonMobil XOM board last year.
Banks have made their own pledges to cut the emissions generated by their internal business and some have restricted loans to heavy-polluting coal and specialized drilling. Some have joined the global Net Zero Banking Alliance that has drawn support from President Biden’s climate envoy John Kerry.
Still, even with these efforts in motion, many banks still circulate the money that keeps the energy sector drilling traditional oil and gas — and that riles environmental groups and some shareholders. Others, favoring a more deliberate shift to solar, wind
and other sources — many of which banks and energy firms also get behind — argue that natural gas
in particular must be in the mix to keep costs down and limit U.S. reliance on rogue nations like Russia.
JPMorgan Chase for one announced last year it will spend $2.5 trillion through the end of 2030 to help clients, customers and communities address vital climate-change risk and opportunity, it said.
Resolutions have also been filed at Canadian banks. And climate-related votes there received a range of support from 8%-20%.