Citigroup, JPMorgan Chase will disclose new climate metric

Bloomberg Creative Photos/Bloomberg Creative

In a win for climate activists, Citigroup and JPMorgan Chase have agreed to start disclosing additional information about their energy financing.

The banks will soon begin publicly divulging what's known as the energy supply financing ratio, which measures a company's level of financing for low-carbon energy versus fossil fuels. Citigroup agreed this week to start offering the statistic, following a commitment by JPMorgan earlier this month.

The New York City comptroller's office and three New York City pension funds had pressured the banks to provide the information.

JPMorgan plans to work with shareholders to provide more clarity about its financing activities, a spokesperson said in a prepared statement.

"We found common ground with NYC Comptroller on disclosing a clean energy financing ratio with an understanding that it is going to take us some time and resources to develop a decision useful approach," the bank spokesperson said.

Citi declined to comment on its agreement with the New York groups.

The moves by two New York-based megabanks follow a loss of momentum last year by climate advocates who have sought to use the shareholder voting process to pressure banks to limit their fossil-fuel lending. In 2023, shareholders at Citi, JPMorgan and Bank of America gave less support than they had a year earlier to proposals on phasing out financing to fossil-fuel projects.

Citi, Bank of America, JPMorgan and Wells Fargo have also recently left the Equator Principles, a benchmark for financial institutions in meeting environmental and social risks, after each of them joined about 20 years ago.

On Thursday, the Sierra Club lauded the New York City entities for spurring JPMorgan and Citi to act. Ben Cushing, campaign director of the Sierra Club's Fossil-Free Finance campaign, said in a prepared statement that those two banks are "the world's two largest financiers of fossil fuels."

In an interview, Cushing said that investors want to know if and how banks are delivering on their climate commitments. "Disclosing the ratio of banks' clean versus dirty energy financing is a good indication of how rigorously those commitments are being implemented," he said.

Cushing added that "all eyes are on the remaining Wall Street banks" to start providing transparency into how they're scaling clean energy financing and reducing fossil fuel lending.

The New York City entities are proposing that Bank of America, Goldman Sachs and Morgan Stanley also disclose their energy supply financing ratios. In their latest proxy statements, Bank of America and Goldman have both recommended that shareholders vote against the shareholder resolution. Morgan Stanley has not yet publicly released its proxy statement.

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In its argument against the shareholder proposal, Bank of America said that Bloomberg currently calculates energy supply finance ratios for global banks. It also pointed to its goal of achieving net zero greenhouse gas emissions before 2050 and its assistance to clients in their transitions to net zero.

Goldman wrote, in explaining its opposition to the proposal, that it will be disclosing a "significant amount of new sustainability and climate-related data over the next year," which may include the energy supply financing ratio. It pointed to European regulations in explaining the new disclosures.

Goldman also wrote that it "cannot prudently commit to the disclosure of new climate metrics related to our financing activities in this time of significant regulatory developments."

Earlier this month, the Securities and Exchange Commission released a final version of its climate-risk disclosure rule, which was significantly watered down from a 2022 draft. The rule is likely to be challenged in court, and some analysts think that it won't survive judicial review.