Wall Street Banks Face Pressure to Speed Up Fossil Fuel Financings

Strategic Insights -

A group of investors is urging six Wall Street banks to step up their efforts to reduce financing of fossil fuels, citing concerns about meeting global climate goals. The banks, including JPMorgan Chase, Citigroup, and Bank of America, are being asked to phase out funding for oil and gas exploration and development, and to disclose how they plan to align their lending and underwriting services with the goal of cutting greenhouse gas emissions by 2030. Separately, the New York City Comptroller and three pension plans have called on lenders to disclose their 2030 targets to cut greenhouse gas emissions on an absolute basis. Climate-related proposals filed last year were unsuccessful, but the investors are hoping for a different outcome this time.

Key Takeaways:

  • Six Wall Street banks, including JPMorgan Chase, Citigroup, and Bank of America, are facing pressure from investors to phase out funding for oil and gas exploration and development.
  • The investors are asking the banks to disclose how they plan to align their lending and underwriting services with the goal of cutting greenhouse gas emissions by 2030.
  • Separately, the New York City Comptroller and three pension plans have called on lenders to disclose their 2030 targets to cut greenhouse gas emissions on an absolute basis.
  • Climate-related proposals filed last year were unsuccessful, but the investors are hoping for a different outcome this time.
  • The investors are citing the risk of possible fines from regulators for greenwashing and stricter climate-related capital requirements from central banks as reasons for the banks to act.
  • Activist shareholder As You Sow is part of the group that filed the resolutions, and Danielle Fugere, its president, says that banks need to set policies and be more transparent about how they are reaching their climate goals.
  • The investor group also filed proposals with Wells Fargo, Goldman Sachs, and Morgan Stanley.

Statistics:

  • $533 billion in bonds and loans financed by banks for the oil, gas, and coal sectors last year, down from $656 billion in 2021 (Bloomberg).
  • Banks are part of a finance coalition called the Glasgow Financial Alliance for Net Zero, which has pledged to meet climate goals outlined in the 2015 Paris agreement.

Sources:

  • Bloomberg
  • Interfaith centre on Corporate Responsibility
  • As You Sow
  • Sierra Club Foundation
  • New York City Comptroller's office
  • Washington Post
  • Wall Street Journal