JP Morgan Chase to face shareholder vote on lending emissions

SEC denies exclusion of climate proposal at US banking giant

JP Morgan Chase looks set to face a shareholder vote on the greenhouse gas emissions associated with its lending activities after the US Securities and Exchange Commission (SEC) ruled against striking it off the ballot. 

The resolution calls on the US banking giant to report on “if and how” it intends to reduce the emissions tied to its loan book in alignment with the Paris Agreement, which aims to limit global temperature rise to below 1.5 degrees Celsius.

JP Morgan’s position as the world’s largest financier of fossil fuels is cited in the proposal, which has been filed by US non-profit As You Sow and states that the bank has provided an average of $65bn annually in financing since the Paris Agreement was signed.

This figure, the proposal adds, “substantially” outweighs the bank’s increase in clean financing over the last nine years. 

The resolution recommends that JP Morgan disclose any actions it is taking to measure and disclose its full carbon footprint – covering Scope 1-3 including its lending activities. And that the bank discloses whether it is “considering setting targets, and on what timeline, to reduce the carbon footprint of its lending activities”. 

JP Morgan, which last week made several sustainability commitments, had attempted to exclude the proposal via the SEC’s ‘no action’ process.

It argued that the resolution sought to “micromanage the Company” by “probing too deeply into matters of a complex nature”.

But the regulator disagreed with the company’s interpretation that the proposal fell foul of the rules on “ordinary business”, saying it is “unable to concur” that the reason cited “provides a basis to exclude”. 

Earlier this month, JP Morgan Chase successfully blocked a shareholder proposal asking it to demonstrate how it will fulfil the commitments it made last year in the Business Roundtable’s (BRT) statement on the purpose of a corporation.

The SEC agreed with the bank that the proposal had been “substantially implemented” and said that it would not recommend enforcement action if the company omits the resolution from its ballot.

A similar proposal, however, will be put to fellow US financial heavyweights Citi Group, Goldman Sachs, Blackrock and Bank of America after the regulator disagreed with the companies that it could be excluded on the reasons they put forward. 

In other banking news: 

Wells Fargo has ruled out direct financing for oil & gas projects in the Arctic National Wildlife Refuge in an update to its environmental and social risk management policy, following on the heels of similar announcements from fellow US banks Goldman Sachs and JPMorgan. The bank made a “risk-based decision” to scrap project-specific drilling in the Arctic region in 2018, but the new update explicitly rules out the refuge – a 19m-acre wildlife conservation area in Alaska which has been opened up for drilling by the Trump administration. The updated policy leaves scope for Wells Fargo to fund companies drilling in the region, and no changes were made to the bank’s other oil & gas financing policies. Wells Fargo was named the world’s top banker of fracked oil & gas and the second largest funder of fossil fuels overall in the 2019 Banking on Climate Change report.

Top-25 Barclays shareholder Jupiter Asset Management has come out in support of a landmark climate resolution asking the UK bank to set targets for winding down its financing of fossil fuel firms not aligned with the Paris climate goals. Jupiter, which holds 1.15% of Barclays’ shares, said it will vote for the resolution, filed in January by shareholder advocacy group ShareAction and 11 institutional investors, including UK pension pools Brunel and LGPS Central and Swedish insurer Folksam, and over 100 individual shareholders. Amundi and Nest also said earlier this month that they would back the resolution, which will go to vote at Barclays’ AGM on May 7. According to Rainforest Action Network, Barclays is Europe’s top financial backer of fossil fuels, and the sixth largest globally. Shareaction is coordinating the resolution.