New York City funds return to US banks with new green financing ratio proposal

New York City Comptroller office shifts focus with pioneering resolution at six North American banking heavyweights, including JPMorgan Chase, Bank of America and Goldman Sachs.

New York City public pension funds have filed a new shareholder proposal at six North American banking giants, calling on them to annually disclose their green financing ratios. 

The banks targeted by the resolution are Bank of America, Citigroup, Goldman Sachs, Morgan Stanley, JPMorgan Chase and Royal Bank of Canada (RBC). 

It is the second year in a row that the Office of the New York City Comptroller, Brad Lander, which oversees the city’s five public pension schemes, has filed climate proposals at major US banks. 

Last year, the Comptroller’s office filed one calling for absolute 2030 emission reduction targets for high-emitting sectors at JPMorgan Chase, Goldman Sachs, Bank of America and RBC. 

That proposal attracted modest support of around 12-13 percent, with the highest tally seen at RBC (17 percent). It went to the vote in a year in which average support for ESG proposals plunged by close to one-third compared with the 2022 proxy season, to just 22 percent. 

This year’s proposal calls on the banks to disclose annually their “Clean Energy Supply Financing Ratio”, defined as “total financing through equity and debt underwriting, and project finance, in low-carbon energy supply relative to that in fossil-fuel energy supply”. 

As part of the reporting, the proposal also requests that banks outline what they classify as “low carbon” and “fossil fuel”. 

The focus on disclosure without reference to targets in the resolved clause of this year’s proposal is noteworthy although targets are referred to in the accompanying statement.

Prescriptiveness has been a common justification by larger US managers for not supporting ESG proposals in recent proxy years. This has coincided with the increasing politicisation of ESG in the US. 

Shareholder backing for climate proposals at banks has been particularly hard to secure.

Another proposal filed in 2023, calling on the biggest US banks to develop fossil fuel phase-out plans saw support fall even further from the low tallies seen in 2022, despite being less restrictive.

None of the phase-out proposals, filed at Bank of America, Citigroup, Wells Fargo, Goldman Sachs, Morgan Stanley and JPMorgan Chase, secured more than 10 percent support.     

The new resolution from New York City has been filed by three of its funds: the New York City Employees’ Retirement System, Teachers’ Retirement System, and Board of Education Retirement System – all of which approved the net-zero plan put forward by the Comptroller’s office last year.

It describes the clean-energy-to-fossil-fuel financing ratios as a “key metric for assessing progress in financing the clean energy transition”. As part of its requests, it recommends the banks to “set timebound ratio targets aligned with its net-zero commitment”.   

Responsible Investor understands that JPMorgan Chase is seeking to exclude New York City’s new proposal via the US Securities and Exchange Commission’s “no action” process, the mechanism through which companies seek the regulator’s approval to omit a resolution from being put to shareholders at its annual general meeting.