In the years since the Paris Agreement on climate change was brokered, Citigroup, Wells Fargo, and Bank of America have poured a combined $789 billion into fossil fuels, including $119 billion last year alone. On Tuesday morning, shareholders in each of those banks tried to change that.
Shareholder resolutions introduced at each of the three banks’ Annual General Meetings this morning proposed that, by the end of this year, the banks adopt “proactive measures to ensure that the company’s lending and underwriting do not contribute to new fossil fuel supplies,” to quote the Citi resolution. In other words, the resolutions demanded that the banks actually act in accordance with the International Energy Agency’s Net Zero Emissions by 2050 Roadmap and the U.N. Environment Program Finance Initiative recommendations to the G20 Sustainable Finance Working Group for credible net-zero commitments. That means stop backing fossil fuel expansion. The resolutions were rejected at all three banks.
Opposing the proposal this morning, Citi CEO Jane Fraser, whose company has loudly talked up its climate commitments in recent years, said that it’s “not feasible for the global economy, for human health or livelihoods to shut down the fossil fuel economy overnight.” This misrepresented the proposals, which didn’t suggest shutting down the fossil fuel economy overnight. But many shareholders seemed to find this line of reasoning persuasive: According to a preliminary tally of votes, only 12.3 percent voted for Citi to adopt climate-target-consistent lending practices. Resolutions at Wells Fargo and Bank of America also failed with around 11 percent of votes each.
Similar resolutions will be put to shareholders at JP Morgan Chase, Morgan Stanley, and Goldman Sachs in the coming weeks; shareholders are likely to reject them there, too. The New York state and city comptrollers both stated their support for the resolutions, though pension funds under their jurisdiction each own less than 1 percent of stock in the banks that voted this morning.
Yet supporters of the resolutions raised today saw the tallies as a win for two reasons. First, any resolution that gets more than 5 percent of shareholder votes is eligible to be refiled next year. These votes met that baseline. And second, altogether, votes for the resolutions represented $65 billion in capital—a sign that a small but significant portion of the legendarily small-c conservative world of Wall Street is starting to sour on fossil fuels.
“It’s not enough any more to say you have a 2050 target. You need to have a credible plan for achieving those targets,” Ben Cushing, who manages the Sierra Club’s Fossil-Free Finance campaign, told me. “The growing consensus we’ve seen emerge over the last several years is that the only credible way to achieve 1.5 [degrees Celsius] and to align with the net-zero by 2050 pathway is to stop new fossil fuel expansion and new supply, immediately.”
/ In honor of Earth Day, Apocalypse Soon content is free to registered users until April 29. Start reading now.
Bank management, however, fought these resolutions tooth and nail. The three banks that met today and the three that will meet in coming weeks all asked shareholders to vote against the resolution in public proxy statements distributed to investors in advance of the meeting.
Citigroup, JP Morgan Chase, and Morgan Stanley even requested (unsuccessfully) that the Securities and Exchange Commission toss out the nonbinding resolution, arguing it would “impose inflexible and far-reaching restrictions” on the bank’s day-to-day business. While noting that the resolution pursued “important objectives,” Citigroup argued that the resolution would enable shareholders to micromanage corporate executives and prevent them from supporting fossil fuel firms to undertake “fundamental shifts to their businesses in the coming years.” Many such companies, the lender told the SEC, “recognize the reality of the collective effort needed to address our global climate challenges. These companies have committed, or are expected to announce commitments, to plans and targets to adapt their business models.” In a change from the Trump administration—when the SEC intervened to stop climate-related shareholder resolutions—the agency this year let them through.
The resolutions raised this morning were brought by the Sierra Club Foundation at Wells Fargo, Harrington Investments at Citi, and Trillium Asset Management at Bank of America, all members of the Interfaith Center on Corporate Responsibility, a shareholder-advocacy coalition. Along similar lines, the Sisters of St. Joseph of Brentwood (a Catholic women’s congregation) filed a resolution with Citi and Wells Fargo asking the company to provide a report to shareholders outlining how their business respects “internationally recognized human rights standards for Indigenous Peoples’ rights in its existing and proposed general corporate and project financing.” Speaking on behalf of the resolution to Citi’s meeting, attorney and Giniw Collective founder Tara Houska made explicit reference to the company’s financing of Enbridge, the company behind the Line 3 pipeline in Minnesota, which multiple tribes say endangers their water and food supply. That resolution was also voted down, though it garnered 34 percent of the votes at Citi and 26 percent at Wells Fargo.
Blackrock, State Street, and Vanguard played a large, albeit quiet, role in today’s votes. These “big three” asset managers, which own 20 percent, on average, of America’s six biggest banks, are top shareholders in Citi, Bank of America, and Wells Fargo. They also own 20 percent of the average company listed on the S&P 500 index.
Asset managers aren’t legally required to disclose how they vote in shareholder meetings until they submit mandated filings with the Securities and Exchange Commission later in the year. State Street did not respond to a request for comment on how it voted this morning in time for publication. Spokespeople for Blackrock and Vanguard each said via email that they don’t comment on specific votes as a matter of policy. On occasion they will choose to disclose their votes on specific resolutions close to a vote, though they declined to on those taken this morning. Given the low vote share for each resolution in the initial tally, Cushing thought it was unlikely any of the big asset managers had voted for the resolutions.
All three of these asset management companies belong to the Glasgow Financial Alliance for Net-Zero, or GFANZ, an effort to align banks, insurers, and asset managers behind the goal of reaching net-zero emissions by 2050. This alliance was announced with much fanfare at the climate talks in Scotland last December. But financial institutions’ promises to start moving toward net-zero have so far been pretty flimsy: The U.K.-based watchdog group ShareAction recently found that 25 European-based banks signed onto GFANZ provided $38 billion in financing to the world’s 50 most expansionary fossil fuel companies in 2021. Blackrock has almost $260 billion invested in fossil fuels worldwide.
These financiers, however, do not like having their sincerity questioned. In a recent interview with Bloomberg, GFANZ convener and former Bank of England head Mark Carney lashed out at those who have criticized alliance members’ continued investments in fossil fuels: “What’s implied for somebody who isn’t an expert in it, which is most people,” he said, “is that anything above zero is too much. Well, that’s not realistic.”
Neither the Net Zero Asset Managers alliance nor the Net-Zero Banking Alliance—both under the GFANZ umbrella—takes a position on specific shareholder resolutions. Adrienne Cleverly, a spokesperson for the Net-Zero Banking Alliance at the UNEP Finance Initiative—whose recommendations were cited in resolutions presented this morning—said only that “the Alliance’s commitment requires targets to be based on credible, science-based scenarios” and that if “banks choose to incorporate these proposals into their operations, it would be permissible according to the Alliance’s commitment and guidelines.” Each group is in the process of collecting goals for interim emissions reductions by 2030 and plans to achieve them. Kirsten Spalding, senior program director of the Ceres Investor Network—a co-convenor of Net Zero Asset Managers—said, prior to the vote announcements, that “what we’re beginning to see are leaders and laggards among the banks,” and noted ongoing conversations about how asset managers engage with the companies they invest in.
The fact that asset management companies have this much power in deciding what new fossil fuel development gets financed speaks to just how little states are doing to rein in fossil fuel spending directly. The U.S. government has a bottomless chest for wars and a sprawling administrative capacity to deport migrants and lock people up for misdemeanor drug charges. Absent more stringent regulations, getting banks to stop financing the destruction of the planet entails asking three companies that control one-fifth of the average S&P 500-listed firm to tell them to cut it out. Judging by the recent votes, though, this strategy could take a while.