As banks approach the 2023 proxy voting season, climate activists have fashioned shareholder proposals that seek commitments to reduce financing to the fossil-fuel industry and more detailed disclosures about how they plan to meet 2030 greenhouse gas emissions targets.
The activists behind the measures hope to see substantial growth in investor support at a time when banks are grappling with a turbulent economy that's being impacted by demands for a fuller accounting of climate-related financial risks.
One of the proposals, which is broadly similar to measures submitted at numerous banks last year, calls for five of the largest U.S. banks to announce how they plan to back away from companies that are producing new oil and natural gas capacity.
"Climate change is primarily caused by fossil fuel production and combustion, facilitated by funding from financial institutions," the
The Sierra Club Foundation, an environmental advocacy group, has filed the proposal at JPMorgan Chase, Wells Fargo, Goldman Sachs and Morgan Stanley. The activist investor Trillium Asset Management has filed the same proposal at Bank of America.
"If it passes, we will look for Bank of America to adopt a policy that allows for a time-bound phaseout of lending and underwriting to fossil-fuel companies that engage in the exploration and development of new fossil fuels," Kate Monahan, director of shareholder advocacy at Trillium, said in an interview.
Last year, a similar fossil-fuel proposal from Trillium received support from 11.02% of BofA shareholders, according to
Also last year, Goldman Sachs shareholders gave a fossil-fuel proposal from Sierra Club 11.19% support, while 10.8% of Wells Fargo investors and 8.38% of Morgan Stanley shareholders voted in favor. At JPMorgan, a fossil-fuel proposal from Mercy Investment Services received 9.97% approval.
While proxy votes are non-binding, regardless of how much shareholder support they receive, the process has transformed over the years into a platform for climate activists and other advocacy groups, aligning with like-minded investors, to pressure banks into adopting resolutions that advance environmental, social and governance causes.
Over the years, issues raised in shareholder proposals that initially received
In 2008, only 3.8% of BofA's shareholders voted in favor of requiring the Charlotte, North Carolina, company to report on its environmental impact using the Equator Principles, a precursor to modern climate risk frameworks, according to
Today, BofA regularly publishes environmental impact assessments based on the Task Force on Climate-related Financial Disclosures, and the company has committed to expanding emissions reporting in connection with its financing activities.
Banks seem unlikely to meet the demands of climate activists anytime soon, especially in light of a
Still, Monahan believes that policy changes at banks often start with shareholder proposals that draw scant support.
"Over the years, if you look at the new types of proposals that have been introduced, once the risks become clear, you start getting more and more support," Monahan said.
One new proposal, which could draw more shareholder support, asks banks to disclose additional details about how they plan to reach 2030 net-zero emissions targets. The activist group As You Sow has filed the proposal at JPMorgan, Wells, BofA, Goldman and Morgan Stanley.
"Targets alone are insufficient," reads the
The activists' goal is to force banks to commit publicly to explaining how they are going to achieve plans they've previously announced, said Danielle Fugere, the president of As You Sow. "Now that you've set this number, how are you going to accomplish it?"
While banks have established systems to meet net-zero targets, Fugere said, "it isn't clear to us that each bank actually has a plan to achieve the targets they've set."
"We want to understand that they have a plan that goes beyond simply relying on clients, green technology or the government — that they will actively be able to begin reducing the carbon intensity of their financing," she said.
Spokespeople for JPMorgan, Goldman, BofA and Wells Fargo declined to comment. Morgan Stanley did not respond to a request for comment.
Scott Shepard, director of the Free Enterprise Project at the conservative-leaning National Center for Public Policy Research, bashed climate-related shareholder proposals as "comprehensively bad ideas."
Shepard said that repeatedly asking investors to consider such measures is "redundant and expensive, and all to no conceivable purpose."
"One of the fundamental problems with these proposals is that they're going to cost a tremendous amount of money," he said. "They don't ask companies to look at all the relevant risks with regard to technological progress, reliability and affordability."
