Investors Drive Banks Toward Greater Transparency on Climate in 2024 Proxy Season

May 24, 2024 /3BL/ - In a notable move for the 2024 proxy season, New York City Comptroller Brad Lander and New York City Public Pension Boards (NYCERS) submitted six shareholder proposals asking banks to disclose a novel metric for assessing their progress towards their net zero targets and contributions to the clean energy transition. The proposals yielded significant commitments and above-average support, reflecting a growing investor demand for a comprehensive understanding of banks' funding practices to ensure alignment with responsible objectives.

As of now, there is little comparable information on banks’ green energy financing. The Clean Energy Supply Finance Ratio shareholder resolutions filed by NYCERS call on each bank to regularly disclose a figure comparing their financing of clean energy to their financing of fossil fuels. To align with the goals of the Paris Agreement, banks must significantly scale up financing for the transition, targeting a crucial 4:1 ratio of financing to renewables over fossil fuels by 2030 (i.e., for every $1 dollar supporting fossil fuel supply, banks must supply $4 to support low carbon energy by 2030). The proposals ask the banks to set a ratio target and work to improve their ratio going forward.

The NYCERS resolution was withdrawn for commitment at three banks – JPMorgan Chase, Citigroup, and Royal Bank of Canada – which all agreed to disclose their financing ratios. Proposals at three other banks – Bank of America, Goldman Sachs, and Morgan Stanley – were brought to a shareholder vote, garnering an average support of 26% (26%, 29%, and a preliminary 23% vote, respectively). Based on a review of the 2023 US proxy season by Columbia Threadneedle, the average vote was 23% last year, suggesting 25% is the new benchmark for meaningful shareholder proposal support in 2024.

“If more institutions adopt, disclose, and improve their clean energy finance ratios, they can help reduce risks to themselves and the entire financial system while increasing financing for the business opportunities in the transition to a clean economy,” said Rob Berridge, Sr. Director of Shareholder Engagement, Ceres. “The results of these proposals have positioned the clean energy supply financing ratio as a vital metric for evaluating banks' progress in financing the transition.”

Other noteworthy proxy season results centered around corporate lobbying disclosure, particularly those seeking greater disclosure in the financial services sector. Votes at Truist (41%), BNY Melon (39%), Goldman Sachs (39%), Wells Fargo (36%), and Morgan Stanley (31%, preliminary) all garnered solid shareholder support. A similar resolution at Capital One was withdrawn for commitment. These results are poised to set a new standard for disclosure in the banking industry as the proposals have prompted significant discourse among banks and investors.

Berridge added, “The high votes for lobbying disclosure are also a significant signal that investors want banks to address the reputational risks of participation in trade associations whose positions contradict the banks’ public position. We hope these efforts will help catalyze enhanced transparency and ambition in the banking sector.”

About Ceres 

Ceres is a nonprofit advocacy organization working to accelerate the transition to a cleaner, more just, and sustainable world. United under a shared vision, our powerful networks of investors and companies are proving sustainability is the bottom line—changing markets and sectors from the inside out. For more information, visit ceres.org.

Media Contact: Vivian Melody, [email protected], 617-247-0700 ext. 353