US banking giants seek to avoid Business Roundtable commitments proposals

SEC ‘no action’ letters sought by JP Morgan, Citi, Bank of America and Goldman

Big US banks are resisting shareholder requests to demonstrate how they plan to deliver on the new corporate focus on stakeholders ushered in by the Business Roundtable lobby group last year.

JP Morgan, Citi Group, Bank of America and Goldman Sachs are seeking to exclude shareholder proposals asking them how they intend to make meaningful the commitments their CEOs made in the BRT’s ‘Statement on the Purpose of a Corporation’ last year.

Filed by California based SRI investor Harrington Investments, the resolutions call on each bank to review how those commitments can be incorporated into their governance and management practices, essentially putting some flesh on the bones of their pledges.

When published in August, the BRT’s statement appeared to signal a break with the traditional shareholder primacy model of capitalism – famously attributed to Milton Friedman – towards a more stakeholder-centric view that holds employees, customers, supply chain, and communities within a company's sphere on a more even standing with shareholders.

The statement, which was published under the chairmanship of JP Morgan’s CEO Jamie Dimon, was backed by 181 US CEOs, including those of the three other US banks. 

But despite committing to “transparency and effective engagement with shareholders” in the BRT statement, the banks are now attempting to exclude non-binding shareholder proposals on their pledges via the US Securities and Exchange Commission’s (SEC) ‘no action’ process. 

‘No-action letters’ from the SEC provide assurances to companies that the regulator will not pursue the matter if the company omits a proposal from the agenda of its annual shareholder meeting.

Despite the BRT’s apparent recent pivot to a more inclusive capitalism, in 2016 it slammed investors with “social agendas”. 

JP Morgan is also seeking to exclude another proposal calling on it to report on how it intends to reduce emissions associated with its lending in alignment with the Paris climate agreement.

That resolution was filed by US non-profit As You Sow, which itself has a Business Roundtable-related resolution currently filed at Blackrock. 

Another commitment in the BRT’s August statement is to respect “the people in our communities and protect the environment by embracing sustainable practices across our businesses”.

But Harrington’s resolution points to JP Morgan’s position as the “world’s top funder of fossil fuels between 2016 through 2018” with reported lending of over $195bn.

Ahead of the Davos World Economic Forum summit, JP Morgan, Citi and Bank of America were also named today by Greenpeace as among 10 banks that account for more than $1trn in fossil fuel finance since the Paris agreement. 

Only Goldman Sachs provided comment to RI at the time of writing. 

“We are engaged in an ongoing discussion with Harrington Investments regarding their shareholder proposal,” the spokesperson said.  “Goldman Sachs has always had a long-term commitment to all of its key stakeholders, and we will continue to focus on these important issues going forward.”

Goldman Sachs and Bank of America argue in their ‘no action’ requests that the Harrington proposal falls foul of rules relating to ordinary business and that it is vague and misleading. 

JP Morgan requests ‘no action’ on the basis that the proposal has been substantially implemented.

Moving to Europe, Lloyds Banking Group has today announced an “ambition” to reduce the carbon emissions it finances by more than 50% by 2030.