Large U.S. Banks Reject Shareholder Climate Resolutions

The Interfaith Center on Corporate Responsibility and several co-filers (collectively, the “Shareholders”), filed proposals with United States and Canadian banks, outlined below, resolving that several large banks institute a company policy that places parameters around lending to fossil fuel companies by the end of 2022.

These banks include:

• Bank of America

• Citigroup

• Goldman Sacs

• JP Morgan Chase

• Morgan Stanley

• Wells Fargo

Proposed Resolutions

 In each proposal, Shareholders cited the International Energy Agency’s (“IEA”) 2021 determination that “in order to ensure global warming of no higher than 1.5 degrees Celsius by 2100 and net zero emissions by 2050, ‘there is no need for investment in new fossil fuel supply.’” The proposals further provided that several of the receiving entities have “publicly committed to reach netzero greenhouse gas emissions by 2050 and to aim to limit warming to 1.5 degrees.”

Despite these resolutions, according to the Banking on Climate Chaos Fossil Fuel Finance Report 2022, three of the receiving entities, Citigroup, Wells Fargo, and Bank of America have contributed $789 billion in financing to fossil fuels globally between 2016 and 2021.

As such, the Shareholders requested these financial institutions to either adopt a net-zero commitment or to “build upon” the previously established commitment by adopting a policy that requires the institutions to ensure that their “financing does not contribute to new fossil fuel supplies that would be inconsistent with the IEA’s Net Zero Emissions by 2050 Scenario.”

Investor Response

On April 26, 2022, Reuters reported that there was very little investor support at several of the receiving banks. Less than 13% of shares at Citigroup and less than 11% at Bank of America voted in favor of these proposed resolutions. In addition, when previously presented with a similar proposal, less than 11% of shares at Wells Fargo voted in support of adopting a bank policy.

According to a statement of Citigroup CEO, Jane Fraser, it is not “feasible for the global economy, for human health or livelihoods to shut down the fossil fuel economy overnight.” Additionally, Citigroup reportedly argued that adoption of these proposed resolutions “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.’”

Prior to voting on the proposed resolutions, Wells Fargo warned shareholders that passing the proposed resolution “would effectively preclude us from offering general purpose loans to the oil and gas sector.”

While Bank of America neither adopted the proposed resolutions nor publicly commented on the reason for refusing to do so, its CEO, Brian Moynihan, stated that Bank of America would continue to monitor client relationships and “work with CEOs and other companies around the world to help [the transition to netzero emissions] take place.”

Although adoption has not been made by any of these institutions, sources provide that the total investors from Citigroup, Wells Fargo and Bank of America who voted in support of adoption of these proposed resolutions totaled $65 billion of corporate capital.

This support stemming from such substantial capital investors indicates that there is potential for adoption of these resolutions in the future. This indication is substantial in light of the clear regulatory focus on the impact of financial institutions on climate change.