JP Morgan successfully blocks proposal on Business Roundtable pledges

Vote on stakeholder capitalism commitments masterminded under bank’s CEO denied

JP Morgan Chase has 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.

Those commitments, which appeared to herald a break with the traditional shareholder primacy model of capitalism, were put out in August by the BRT under the chairmanship of JP Morgan’s own CEO, Jamie Dimon.

“The American dream is alive, but fraying”, Dimon said at the time.

In its response to JP Morgan’s ‘no action’ request, the US Securities and Exchange Commission (SEC) agreed that the proposal had been “substantially implemented” by the bank, and said that it would not recommend enforcement action if the company omits the proposal from its ballot.

181 US CEOs – including those of Citi Group, Bank of America and Goldman Sachs – put their name to the statement from the US lobby group, committing to put employees, customers, supply chains, communities and the environment on a more even standing with shareholders.

"In the absence of actions like our proposal [the BRT statement] will serve as a meaningless gesture until it is enforceable through corporate governance documents or corporate law".

In response, California based SRI investor Harrington Investments filed resolutions at all four banks, calling on them to review how the commitments could be meaningfully incorporated into governance and management practices.

“Such public statements may be beneficial to the image of our Company from a marketing and public relations standpoint and enhance our management’s standing in many communities”, the proposal at JP Morgan states, but if it were to be translated into company policy as it stands, it would be “confusing”, “and should raise questions for investors”.

Last month, RI reported that all four US banks had sought to exclude the proposal via the SEC ‘no action’ process.

The SEC’s decision on JP Morgan is the first indicator of the regulator’s thinking on the BRT proposals.

JP Morgan stated in its ‘no action’ letter that its Corporate Governance and Nominating Committee found the bank “already operates in accordance with the principles” and that “no additional action or assessment is required”.

It did not challenge the claim in the shareholder proposal that JP Morgan is the “world’s top funder of fossil fuels” – financing an estimated $195bn between 2016-18.

The SEC gave its decision on JP Morgan before John Harrington, who filed the resolution, could reply to the banking giant’s request to block the proposal. However, in reply to Citi and Bank of America’s ‘no action’ requests, he wrote: “In the absence of actions like our proposal [the BRT statement] will serve as a meaningless gesture until it is enforceable through corporate governance documents or corporate law”.

Harrington adds in the Bank of America reply that any attempts to downplay the significance of the BRT statement contradicts its presentation by the CEOs as a “profound new approach”.

US investment behemoth Blackrock is also attempting to reject a resolution on the BRT commitments its CEO, Larry Fink, put his name to. That resolution was filed by US non-profit As You Sow.

A spokesperson for JP Morgan referred RI to the SEC filings when contacted for comment.

The ‘no action’ response comes as shareholder advocacy non-profit, Majority Action has called on JP Morgan Chase’s investors to vote against the re-nomination of former ExxonMobil Chair and CEO, Lee Raymond as lead independent director. In an ‘Exempt Solicitation’ filed at the SEC, they describe Lee, who has served on JP Morgan’s board for 33 years, as “uniquely poorly qualified to provide the oversight needed to protect long-term shareholder value” in the face of growing climate risks.