The New York State Common Retirement Fund has called on shareholders to back resolutions demanding stricter fossil fuel financing policies at some of the world’s biggest banks, one of the first such moves by a major pension fund.
The $280bn fund on Monday called on shareholders to vote in favour of proposals filed at six major lenders — including Bank of America, Goldman Sachs and JPMorgan Chase — asking the groups to align their fossil fuel financing policies with achieving net zero emissions by 2050.
That would mean ensuring that financing did not contribute to “new fossil fuel supplies” that would be inconsistent with achieving net zero, the proposals state.
Shareholders should support these resolutions because “financial institutions have a key role to play in decarbonising the global economy and addressing the systemic risks posed by climate change,” said the fund in a letter.
The climate impacts of the lending and underwriting activities of big banks are increasingly under the spotlight, with pressure coming from shareholders, activists and celebrities.
All six of the banks targeted by the New York State Common Retirement Fund, which also included Citigroup, Morgan Stanley and Wells Fargo, have joined Mark Carney’s Net-Zero Banking Alliance (NZBA) that commits them to decarbonising their portfolios by mid century.
“To ensure that those commitments are credible, they need to adopt policies that eliminate financing of new fossil fuel exploration and development,” the pension fund said on Monday. All six banks have recommended that shareholders vote against the fossil fuel funding proposals.
Financial institutions have become a focal point for activists, and a raft of climate-related proposals have been filed ahead of banks’ annual general meetings this season.
Lenders including Royal Bank of Canada (RBC), the Canadian Imperial Bank of Commerce and Scotiabank last week fought off proposals calling for stricter climate policies, although one filed at RBC asking the bank to hold an annual vote on its climate plans won 22 per cent of the vote.
Pressure has also come from celebrities including the Hollywood actor Mark Ruffalo, who banks with RBC-owned City National Bank. A public letter signed by Ruffalo, as well as the actors Scarlett Johansson and Jane Fonda, calls on RBC to “stop funding fossil fuel expansion.”
“They haven’t really engaged with us since that letter came out, which is really shocking to me,” Ruffalo told the Financial Times. “For us to deal with climate change we have to deal with the financial system.”
Many polluting fossil fuel groups, such as Canada’s tar sands oil producers, are betting on carbon capture and storage (CCS) technology, rather than a fall in production, to drive down emissions.
But that would not necessarily help the banks meet their net zero goals: while CCS could reduce production emissions, substantial volumes of carbon would still be emitted when the fuel was used. Under NZBA rules, banks must count these emissions.