$35bn investor coalition writes to Bank of America CEO on fossil fuel financing

Interfaith Center on Corporate Responsibility missive ahead of shareholder meeting

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A group of investors under the banner of the Interfaith Center on Corporate Responsibility (ICCR), the 43-year-old US investor coalition, have written to Bank of America asking it to reconsider its opposition to a shareholder resolution about its financing for fossil fuels.

The motion, filed by the Sisters of the Holy Names of Jesus and Mary along with several co-filing institutions, is due to be voted on at the bank’s annual meeting on May 7 in Charlotte, North Carolina.

The bank has advised shareholders to vote against it, saying it already provides information on the emissions attributed to one of its most carbon-intensive portfolios and its policies to address related risks and opportunities.

The investor letter, to the bank’s Chief Executive Brian Moynihan, was endorsed by over 50 institutional investors with combined assets under management of almost $35bn.

The resolution to be voted on calls for the bank to report to shareholders, by September this year, its assessment of the greenhouse gas emissions resulting from its financing portfolio and its exposure to climate change risk in its lending, investing, and financing activities. The investors are most concerned about the bank’s financing for the coal industry.

The supporting statement for the proposal references Climate Tracker Initiative’s work on ‘stranded assets’ which has found that the mispricing of climate risk from fossil fuel reserves exposes financial institutions to significant financial risks. The investor letter points out that a similar resolution was filed with PNC Bank last year by ICCR member Boston Common Asset Management resulting in a 22.8% vote at the annual meeting.

ICCR said: “As responsible investors, many of us representing faith communities, we are concerned about the environmental and social impacts of climate change and what it means for the planet and its people, particularly those most vulnerable.“In addition, as long-term shareholders, we are also acutely aware of the material risks it poses to shareholder value for the companies in our portfolios.”

The investors – who acknowledge the bank’s $50bn commitment to environmental initiatives and its $500m green bond in November last year – want it to develop formal lending criteria around climate risk and invest in low carbon solutions.

Bank of America is chaired by former DuPont CEO Chas Holliday, who also chairs the UN/World Bank Sustainable Energy for All initiative. As well as being a director of Royal Dutch Shell, he is a former chair at the World Business Council for Sustainable Development. In 2012, he said investors were “significantly underestimating” the impact of climate change.

The bank argues in its proxy statement that it recognizes the potential benefits from financial institutions “understanding and assessing” the emissions tied to lending and investment portfolios.

So it supports the World Resources Institute’s work on a framework for financial institutions to assess the climate change impacts of lending, investing and financing decisions.

But, it says, until there is a standardized and advanced way to report the impacts, the kind of report sought by the ICCR “would produce arbitrary and meaningless results at a very high cost to stockholders”.

“Our company is an industry leader in supporting low-carbon solutions through our lending and financing programs, and in publicly disclosing the greenhouse gas emissions related to our operations and our business activities,” it says, adding that environmental data body the CDP [Carbon Disclosure Project] rated its 2013 report a 98 (out of 100).

The bank is facing other shareholder resolutions at the AGM, all of which it is resisting. They include: Cumulative Voting in Director Elections (Proponent: Evelyn Davis); Proxy Access (Harrington Investments); Report on lobbying (AFSCME Employees Pension Plan).