Investors challenge Goldman, Wells Fargo and BofA to vote for climate plans

A growing wave of investors this week has backed calls for climate change plans from Goldman Sachs, Wells Fargo and Bank of America as lenders face continued pressure on the role they play in financing global warming.

Three out of 10 voting shareholders, including some of the world’s largest investors, supported Goldman’s resolution on Wednesday to set out a climate risk transition plan that describes how it is aligning its financing activities with greenhouse gas emission reduction goals. . This was despite the board’s recommendation that investors vote against the proposal.

Wells Fargo revealed on Thursday that nearly 31 percent of shareholders also voted for a resolution to the transition plan at its annual meeting on Wednesday.

Similarly, at Bank of America, preliminary data showed that 28.5% of shareholders voted in favor of an equivalent resolution, even against the board’s recommendation.

Significant shareholder dissent is generally considered to be a vote against a management recommendation by at least 20% of the shares voted.

The level of support for resolutions is a sign of growing demands on banks to finance carbon-intensive companies and projects.

The Norwegian Oil Fund, the world’s largest sovereign wealth fund, backed transition plan resolutions from Bank of America, Wells Fargo and Goldman Sachs, as well as Legal and General Investment Management.

The UK’s largest asset manager, LGIM, said it would also support transition plan resolutions for JPMorgan Chase and Morgan Stanley at upcoming shareholder meetings.

Institutional Shareholder Services, the influential proxy advisor used by large investors to guide voting decisions at annual meetings, this week recommended that shareholders support transition plan resolutions. It has yet to issue its advisory 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 has been “transparent” about its progress.

The bank added that it has set and disclosed 2030 targets for reducing emissions associated with vehicle manufacturing, energy and power generation financing activities, and will commit to setting and disclosing emissions reduction targets of lending activities “for other key high carbon sectors” by April 2024.

Goldman Sachs said the transition “to a more sustainable economy will be a decade-long effort that will require significant innovation and investment across the entire economy.”

“Goldman Sachs’ role is to help our clients unlock the tremendous opportunities ahead as they navigate the complexity of this transition,” he said.

Although the votes fell short of majority support, Danielle Fugere, president of As You Sow, which has filed the resolutions with US banks, said the group is “delighted to see such a strong show of shareholder support.” ”.

However, additional environmental, social and governance (ESG) resolutions presented to bank investors have 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 the financing of a company that deals with oil pipelinesit received around 31% support, but this was slightly lower than a similar resolution last year.

Speaking about the proposal at the bank’s annual meeting, John Dugan, chairman of Citi, said, “We are committed to respecting human rights wherever we operate.”

This week’s ESG votes came against the backdrop of pressure on asset managers themselves in the US for their role in so-called awakened capitalism.

Some Republican state and pension funds, led by Florida Gov. Ron DeSantis, led a backlash against considering environmental, social and governance issues in investment decisions.

Reflecting the sharply opposing views on the matter Daniel Firger, the US founder of Great Circle Capital Advisors, a consultancy firm focused on net zero investment strategies, presented the counterattack.

“Investors would do well. . . try to shut out the extravagant culture war rhetoric emanating from a small group of right-wing, fossil-fuel-funded political operatives masquerading as corporate governance benefactors,” she said.

According to Insightia, which tracks AGM votes, in the past only seven resolutions on climate or the environment globally not backed by management have had the support of at least 28% of voted shares.

Only one of these resolutions received more than 50% support from a bank without management support, the data show. In 2019, just over half of shareholders supported a resolution calling on South Africa’s Standard Bank Group to adopt and disclose a policy on lending to coal-fired energy projects and coal mining operations.

In 2020, 49.6% of shareholders supported a resolution asking JPMorgan to report whether it was aligning its lending with the Paris Agreement goal of keeping global warming below 2C and ideally at below 1.5°C.

The world’s 60 largest banks provided $673 billion in financing for fossil fuels last year, according to data compiled by a coalition of campaign groups organized by the non-profit Rainforest Action Network.

JPMorgan was the world’s second-largest lender of fossil fuels in 2022, the report shows, followed by Wells Fargo and Bank of America.

Beau O’Sullivan, a strategist at campaign group Bank on our Future, said the pressure on banks for their climate change financing “isn’t going away, for sure”.

“You will see this accelerate now. What we see in these transition plans is critical,” she said.