A rising tide of investors have backed demands for climate change plans from Goldman Sachs, Wells Fargo and Bank of America this week, as lenders face continued pressures over the role they play in financing global warming.
Three in 10 of voting shareholders, including some of the world’s biggest investors, backed the resolution on Wednesday for Goldman to set out a climate risk transition plan that describes how it is aligning its financing activities with targets to reduce greenhouse gas emission. This was despite the board’s recommendation that investors vote against the proposal.
Wells Fargo disclosed on Thursday that almost 31 per cent of shareholders also voted for a transition plan resolution at the annual meeting on Wednesday.
Similarly, at Bank of America, preliminary figures showed 28.5 per cent of shareholders who voted backed an equivalent resolution, also against the board’s recommendation.
Significant shareholder dissent is generally regarded as being a vote against a management recommendation by at least 20 per cent of the shares voted.
The level of support for the resolutions is a sign of the increasing demands on banks over their financing of carbon-intensive companies and projects.
Norway’s oil fund, the world’s largest sovereign wealth fund, backed the transition plan resolutions at Bank of America, Wells Fargo and Goldman Sachs, as did Legal and General Investment Management.
The UK’s largest asset manager, LGIM, said it would also support the transition plan resolutions for JPMorgan Chase and Morgan Stanley at forthcoming shareholder meetings.
Institutional Shareholder Services, the influential proxy adviser used by large investors to guide voting decisions at annual meetings, had recommended shareholders back the transition plan resolutions this week. It has yet to issue its advice for JPMorgan and Morgan Stanley.
In its proxy filing, Bank of America said it was “committed to achieving net zero emissions” from its “operations, supply chain and financing activities before 2050”, and was “transparent” about its progress.
The bank added that it has set and disclosed 2030 targets for reducing emissions associated with financing activities related to vehicle manufacturing, energy and power generation, and would commit to set and disclose financing activity emission reduction targets “for other key high-emitting sectors” by April 2024.
Goldman Sachs said the transition “to a more sustainable economy will be a decades-long effort requiring significant innovation and investment across the entire economy”.
“The role of Goldman Sachs is to help our clients unlock the enormous opportunities ahead as they navigate through the complexity of this transition,” it said.
Despite the votes falling short of majority backing, Danielle Fugere, president of As You Sow, which filed the resolutions at the US banks, said the group was “glad to see such a strong showing of support from shareholders”.
However, additional environmental, social and governance (ESG) resolutions put to the bank investors generally received a lower level of investor support.
A separate resolution focused on indigenous rights at Citigroup, which led to a war of words between the bank and an order of nuns over the financing of a company involved in oil pipelines, received support of about 31 per cent, but this was down slightly on a similar resolution last year.
Speaking about the proposal at the bank’s annual meeting John Dugan, Citi’s chair, said: “We are committed to respecting human rights wherever we do business.”
The votes on ESG issues this week came against the backdrop of pressures on asset managers themselves in the US over their role in so-called woke capitalism.
Some pension funds and Republican states, led by Florida governor Ron DeSantis, have driven a backlash against the consideration of environmental, social and governance issues in investment decisions.
Reflecting the sharply opposing views on the subject Daniel Firger, the US-based founder of Great Circle Capital Advisors, a consultancy focused on net zero investment strategies, presented the counter-attack.
“Investors would do well . . . try to tune out the kooky, culture war rhetoric coming from a small cadre of rightwing, fossil fuel-funded political operatives masquerading as corporate governance do-gooders,” he said.
According to Insightia, which tracks AGM voting, in the past only seven climate or environmental resolutions globally that were not backed by management have had the support of at least 28 per cent of shares voted.
Only one such resolution has ever received more than 50 per cent backing at a bank without support from management, the data shows. In 2019, just over half of shareholders backed a resolution calling for South Africa’s Standard Bank Group to adopt and disclose a policy on lending to coal-fired power projects and coal mining operations.
In 2020, 49.6 per cent of shareholders backed a resolution calling for JPMorgan to report on whether it was aligning its lending with the Paris agreement goal to keep global warming below 2C, and ideally below 1.5C.
The world’s 60 largest banks provided $673bn in financing for fossil fuels last year, according to data collated by a coalition of campaign groups, organised by the non-profit Rainforest Action Network.
JPMorgan was the world’s second-biggest lender to fossil fuels in 2022, the report shows, followed by Wells Fargo and Bank of America.
Beau O’Sullivan, a strategist at campaigning group Bank on our Future, said the pressure on banks over their financing of climate change “is not going away, for sure.”
“You will see this accelerate now. What we see in these transition plans is key,” he said.
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Investors defy Goldman, Wells Fargo and BofA in vote for climate plans
