JPMorgan Chase signals greater support for environmental and social resolutions

Shift in emphasis in bank’s policy follows… a shareholder resolution

Following in the footsteps of Vanguard, JPMorgan Chase appears to have signalled a willingness to vote on climate change and other environmental and social (E&S) shareholder resolutions.

It follows a shareholder resolution on the issue filed by a number of investors led by Walden Asset Management, along with the City of Seattle Employees’ Retirement System, First Affirmative Financial Network, Dignity Health, Mercy Investment Services and Rockefeller and Company.

And it comes despite CEO Jamie Dimon’s recent criticism of “self-serving” shareholders and special interest groups hijacking annual meetings and making them a “complete farce” .

As at Vanguard, the resolution requested a review of JPMorgan’s proxy voting process and record of votes on climate change.

Following dialogue with the company, the resolution was withdrawn because JPMorgan indicated it would update its website with information on the ways it believed climate change created risks and opportunities and would also amend the factors used when evaluating shareholder on the issue.

In fact, the bank updated its proxy voting guidelines effective this month, issuing a lengthy discussion paper on ESG issues.

In addition to the guideline revisions, the firm also added an ESG Portfolio Manager to its North American Proxy Voting Committee, and an individual with specific extractive sector expertise to the US Equities’ corporate governance specialists.The new guidelines admit that “environmental policies may have a long-term impact on the company’s financial performance.” The firm will be looking for disclosures on: “the impact of company operations on the environment and the cost of compliance with laws and regulations relating to environmental matters, physical damage to the environment (including the costs of clean-ups and repairs), consumer preferences and capital investments related to climate change.”

The firm will support disclosure practices that are consistent with industry standards but that would not create a competitive disadvantage. It also encourages companies to incorporate environmental or social issues in a risk-assessment or risk-reporting framework. Finally, proposals filed at companies “that have been involved in controversies, fines or litigation are expected to be subject to heightened review and consideration.”

Tim Smith, director of ESG Shareowner Engagement at Walden, said that the updated policy statement “may have a long-term impact on the company’s financial performance” and that it “sends an exceedingly important message” to companies by one of the world’s most significant investment managers and largest shareholder.

“This certainly reinforces the importance of the climate change issue for senior management of public companies. Like the other objects of Walden’s campaign, JPMorgan focused on governance issues when making proxy voting decisions and “generally voted against resolutions on environmental and social issues. We are hopeful that JPM’s announcement and its engagement on climate risk will also result in active support for shareholder resolutions on climate change going forward,” concluded Smith. Link