JPMorgan Chase told shareholders this week to oppose efforts by climate activists to force the bank to divest from the fossil fuel industry and commit to a more stringent decarbonization strategy.
The bank's board of directors recommended in JPMorgan's 2023 proxy statement that shareholders reject three climate proposals that will be voted on at an annual meeting in May, arguing that approval of the measures would impede management and not create long-term value for investors.
The proposals from activist groups including As You Sow and the Sierra Club Foundation as well as the Comptroller of the City of New York ask shareholders of the largest U.S. bank by assets to signal support for stronger and more transparent climate finance policies.
Large U.S. banks have faced growing pressure over the last decade from climate and shareholder activists to use the weight of their balance sheets to lead decarbonization initiatives. While banks have initially resisted these efforts, some previous climate proposals were eventually adopted as policy.
In a proposal submitted by the Sierra Club Foundation, shareholders are asked to vote for a policy that would require JPMorgan to adopt a "time-bound phase-out" of the bank's lending and underwriting to companies that engage in new fossil fuel exploration and development.
"Adoption of the requested policy would restrict management's ability to make the best business judgments on which companies and projects to finance," JPMorgan's board members wrote in response to the proposal.
An "abrupt withdrawal" from the fossil fuel industry is not "prudent," the board members said, and would increase energy security risks without optimizing decarbonization efforts over the long term.
"Having an emissions reduction target is good, but their actions speak louder than their targets," said Paul Rissman, a Sierra Club board member who was previously an executive vice president at AllianceBernstein.
"We think this is good for their shareholders, not bad, because it will force them to actually put some guardrails around their transition plans," Rissman said during an interview.
In another proposal, the New York City Comptroller submitted a resolution on behalf of the city's pension system requesting shareholders support a policy for JPMorgan to begin disclosing "absolute" greenhouse gas emissions reduction targets for the power and oil and gas sectors.
The bank already made disclosures based on "intensity" emissions targets. The difference between the two metrics is that absolute targets quantify the exact volume of emissions a company is producing, while intensity targets are based on the efficiency of the process that generates pollutants.
While JPMorgan recognized the role absolute targets play in measuring emissions, and that it plans to expand reporting on this metric in the coming years, the bank said that intensity targets are currently the "best tool to support clients" in contributing to decarbonization initiatives.
"The requested report would interfere with management's ability to pursue its strategy, monitor and respond to developments," JPMorgan stated.
Brad Lander, the New York City Comptroller, said in an emailed statement that JPMorgan's emissions reduction targets should be applauded, but it also "can't be all talk."
"We expect them to take the steps needed now to reduce emissions on the timeline to which they have committed," Lander said in the statement. "Absent a concrete plan to reduce absolute emissions in the real world in the near term, any net zero plan rings hollow."
The Federal Reserve Board of Governors voted 6-1 to seek public comment on a new regulatory framework for climate-related financial risks. The requirements would add to existing risk management standards.
A proposal from As You Sow, an advocacy group focused on corporate accountability, requested shareholder support for JPMorgan to disclose additional details about plans to "align its financing activities" with the bank's commitment to reduce certain levels of emissions by 2030.
In response, JPMorgan highlighted previous actions taken to expand climate disclosures, including the release of a report last December that detailed the bank's emissions measurement methodology and framework as well as progress on existing decarbonization targets.
"We believe our Climate Report provides shareholders with appropriate and meaningful information, including details about management's approach to climate risk management," JPMorgan stated in the bank's proxy statement.
"The requested report would prescribe the content of our climate-related communications and would not necessarily be in the interests of long-term shareholder value," JPMorgan wrote.
Danielle Fugere, As You Sow's president and chief counsel, credited JPMorgan for actions the bank has already taken to increase climate-related disclosures but said greater disclosures are needed to ensure that 2030 emissions reduction targets are met.
"We believe that they've essentially put together some actions that they're taking, which is good, but that they don't actually have a plan," Fugere said in an interview. "We are seeking additional information, and so we're continuing to talk about that."
