Nine of the largest U.S. and Canadian banks will face shareholder votes this spring on proposals to take more aggressive steps to reduce financing for new oil and gas industry projects.
The banks targeted by proxy votes at their upcoming shareholder meetings are JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, Goldman Sachs and Morgan Stanley, along with Bank of Montreal, Toronto-Dominion Bank and Royal Bank of Canada.
In their annual proxy statements, most of the banks have urged their shareholders to vote against the proposals, arguing that their existing policies go far enough in pushing to reduce carbon emissions.
The votes are not binding and are seen as unlikely to pass with a majority of shareholders. Still, the first-ever votes on the issue will give climate activists a better understanding of which investors they will need to sway going forward.
And if enough shareholders support the proposals, advocates hope that bank executives will consider tightening their lending policies further in an effort to combat climate change.
“It’s like this dance where you see what kind of votes you get, and you see what the banks are willing to move on,” said Paul Rissman, a member of the Sierra Club Foundation board of directors. “It’s a long cycle of negotiation.”
In their proposals, advocates are asking industry leaders to come up with a proposal by the end of the year to reduce new financing for fossil-fuel companies.
Some of the companies, including JPMorgan Chase, have adopted financing commitments with lengthy timelines that they say align with the goals of the 2015 Paris Agreement on climate change.
Others, like Bank of America, have gone further by calling off funding for Arctic oil drilling, along with broader financing goals.
But advocates say the six largest U.S. banks have provided more than $1 trillion in financing to fossil-fuel companies since the Paris Agreement was reached. They argue that the current measures do not go far enough to prevent potential damage and risks to the banks themselves under scenarios laid out by the International Energy Agency, which has set a net-zero emissions goal by 2050.
In its proxy statement arguing against the proposal, Goldman Sachs said limiting the company’s financing to “hard-to-abate sectors, which critically need both our engagement and our capital” is not beneficial to the New York bank, its shareholders or communities.
“We do not believe that placing limits on financing to producers will result in either reduction in emissions or demand for fossil fuels,” Goldman said in its proxy statement.
Three banks — Citigroup, JPMorgan Chase and Morgan Stanley — appealed to the Securities and Exchange Commission in bids to prevent shareholder votes on the proposals. But the agency denied all three efforts.
In the SEC’s March 7
None of the banks provided comments for this article beyond their proxy statements. JPMorgan Chase has not yet released its proxy statement, but a company spokesperson declined to comment on the climate-related shareholder proposal.
For the advocacy groups, getting the votes of around 30% of shareholders would be a success, Rissman said. Securing more than 5% of vote would ensure that the measures can be taken up again next year. Rissman said he expects that threshold to be met.
“It doesn’t matter if they pass or not, what matters is if they get a good vote,” he said.
The proxy votes come as climate risk becomes a central topic of debate in Washington. Last week, the SEC
And earlier in March, Senate Republicans
Raskin had said the Fed was not in a position to pick winners and losers, but her nomination was seen as a chance for the central bank to address the risks that climate change poses to the financial system.
“Banks play a critical role in this crisis,” Mary Minette, director of shareholder advocacy at Mercy Investment Services, one of the firms submitting the climate proposals, said in a press release.
She added that banks “need to take accountability for the role their financing of the fossil-fuel industry plays in perpetuating climate change.”
