On Tuesday, shareholders of three big US banks asked them to stop financing fossil fuels. This is a tricky situation for the banks and their top investors, who are also under political pressure from the other side to keep helping the oil and gas businesses.
Investor activists at Bank of America, Citigroup, and Wells Fargo & Co. who care about the environment put forward the motions. All three banks say that the nonbinding measures that call for policies to stop lending and underwriting for new fossil fuel research and development are not needed because they already have plans to reach net-zero emissions by 2050.
At the meetings of the banks last year, similar motions didn’t get more than 13% of the vote. This year, supporters, like the Sierra Club Foundation, changed the language to make it less strict. One way they did this was by dropping a call for a planning date.
Wall Street Cares More About ESG Issues Than Profits
The way big Wall Street firms handle environmental, social, and governance (ESG) problems will be shown by the votes at their annual meetings. Republican lawmakers in the U.S. say that Wall Street cares more about ESG issues than profits, and on Monday, climate protesters sprayed graffiti on two New York bank offices.
The tweet below confirms the news:
Top US banks face calls to wind down fossil-fuel financing https://t.co/dsxs6EUMKO pic.twitter.com/7srrAyvsGr
— Reuters Business (@ReutersBiz) April 25, 2023
Heidi Welsh, executive head of the Sustainable Investments Institute, which keeps track of shareholder votes, said that support from 20% or more of each bank’s investors would be important for the activists. “If you get at least 20%, then you’re in the game,” she told him.
Ben Cushing, a campaign director for the Sierra Club, said that the results of the resolution should be looked at in the same way as other environmental ideas. Cushing said that when the decisions are taken together, they “represent a significant challenge to the big banks’ story that they are managing and reducing climate risks well.”
Several investors, like Britain’s Legal & General, have said they agree with the phase-out plans. But on Monday, leaders at Neuberger Berman wrote that they don’t like phase-out agreements because the banks that would be affected “are very open about their business risks and lending strategies.”
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