This shareholder season, STMP launched the Wall Street’s Moment of Truth – People or Fossil Fuels campaign to push investors to support climate action at banks and insurance companies. Shareholder, or “AGM” (annual general meeting) season is a period roughly between April and June when publicly-traded companies hold their annual shareholder meetings. At these meetings, shareholders vote on shareholder resolutions, which provide direction for how a given company does business. They are often related to corporate governance. For example, shareholder resolutions can ask a company to meet emissions reduction goals, disclose information about gender pay gaps, or increase the diversity of its board. Recent years have seen a notable uptick in resolutions concerning social issues, including climate, racial, and economic justice.
This year, Stop the Money Pipeline rallied behind a series of resolutions that would push major US banks and insurance corporations to phase out their financial services for fossil fuel companies that are expanding their fossil fuel operations (which is nearly all of them).
Fossil fuel companies don’t usually have enough capital on hand to build out new pipelines, power plants, or oil wells – they need to go to the bank to get a loan or bond financed. Most major US banks have publicly committed to align their financing practices with the emissions reduction timeline laid out in the Paris Agreement. However, behind the scenes, they’re still making loans and underwriting bonds to companies expanding fossil fuel extraction. Similarly, new fossil fuel projects can’t be built without insurance, yet insurance companies are still insuring them. These financing practices are wholly incompatible with global 2030 climate goals and fly in the face of warnings from the International Energy Agency, the IPCC and others.
This shareholder season was an opportunity for shareholders to push these corporations to act in line with their stated objectives, and in line with what is required to prevent climate chaos and protect frontline communities.
“No Expansion” resolution: votes exceeded expectations, will likely gain momentum next year
The “big six” US banks that faced No Expansion resolutions were Bank of America, Citi, Goldman Sachs, JPMorgan Chase, Morgan Stanley, and Wells Fargo. Collectively, these banks have financed fossil fuels to the tune of $1.4 trillion since the Paris Agreement was adopted in late 2015. If we can get these banks to stop providing financial support to new fossil fuel projects, we can help draw down global emissions in line with what’s needed to protect our communities from climate chaos. The results at these “big six” shareholder meetings were impressive:
- Citigroup: 12.8%
- Bank of America: 11%
- Wells Fargo: 11%
- Goldman Sachs: 11%
- JP Morgan Chase: 10.9%
- Morgan Stanley: 8.3%
Though the resolutions’ results seem low, they inspire confidence for future efforts. For context, any resolution that receives at least 5% of the vote is eligible to be refiled the following year. The good news is that a shareholder resolution doesn’t need to get a majority of the vote in order to be effective – success is measured by changes in business practices, not in vote counts. According to shareholder activism group As You Sow, “Votes with more than 10% support are difficult for companies to ignore. Resolutions with 20% or more support send a clear message to corporate management that the current company policy is too risky or not beneficial to shareholder interests. Only the least responsive company would ignore one in five of its shareholders.”
As a recent example, when shareholders were asked to vote out Former Exxon CEO Lee Raymond from the JP Morgan Chase board, the vote was less than 15%, but Raymond was still forced to resign later that year. The No Expansion resolution’s performance at the six major US banks this year remains impressive given that it has never been seen before and demands much more of banks than disclosure and previous resolutions. This resolution isn’t going away and if it follows other climate resolution trends, its support will only gain momentum from here.
Prior to the votes, major institutional investors announced their support of the resolutions and urged other investors to follow suit, among them:
- New York State pension fund – the third largest pension fund in the country
- New York City’s main pension fund
- Rhode Island pension system
- Seattle City Employees Retirement system
Unfortunately, the No Expansion resolution gave financial institutions another opportunity to promote bad faith generalizations of the No Expansion resolution. Ahead of the vote, Citi CEO Jane Fraser told shareholders it’s “not feasible for the global economy or for human health or livelihoods to shut down the fossil-fuel economy overnight.” “The transition needs to be accelerated, but it also needs to be managed to minimize the shock to our economy and our communities,” she said, according to Bloomberg. Much more narrative work, from the local to the global level, needs to be prioritized in order to underscore that a just transition off fossil fuels is not a pie in the sky demand of climate advocates, but a scientific necessity.
Fossil fuel companies can’t build new pipelines, extraction sites, or other infrastructure without insurance. Big insurers, such as Travelers, Chubb, and Hartford know that the climate crisis isn’t a future problem – they’re paying climate damages from fires, floods, and hurricanes now. They’re also trying to deny insurance for people living in climate-vulnerable areas now, while propping up the fossil fuel industry.
- Chubb: 19.4%
- Travelers: 13%
- Hartford: 8.8%
Support varied more among these shareholders than it did among the “big six” bank shareholders. Similarly, the No Expansion resolution is eligible to be refiled next year, and the insurance industry remains on notice for our coalition’s demands.
Asset managers pool money from a variety of sources ― high net-worth individuals, pension funds, individual retirement accounts, university and nonprofit endowments ― and invest the funds on behalf of their clients. This means that giant asset management companies such as BlackRock, Vanguard, and State Street own a disproportionate amount of shares of the biggest companies in the world, including banks and fossil fuel companies. Indeed, these three companies alone own an estimated 20% of the entire S&P 500. Because of their size, asset managers have influence over how the companies causing and financing climate destruction do business. We don’t know exactly how these big asset managers voted yet, as they do not publish their votes until well after shareholder season. However, we do know that BlackRock’s CEO Larry Fink caved to fossil fuel industry blowback against no expansion resolutions (what they call “fossil fuel discrimination”) in a proxy voting memo in May. In the memo, he hinted that BlackRock would not be supporting the No Expansion resolution and similar climate resolutions, calling them “too prescriptive.” BlackRock’s “Big Backslide” is a major problem–and one we will need to fight hard ahead of shareholder votes on No Expansion.
HAPPENING NOW: Activists crash @Citibank and @JPMorgan panel
and calls them out for speaking on “sustainable financing” while being the TWO BIGGEST funders of fossil fuels. #RBUSA #DefundClimateChaos pic.twitter.com/mKJBffMbG1
— New York Communities for Change (@nychange) April 19, 2022
It wouldn’t be a Stop the Money pipeline campaign without our grassroots partners bringing the heat to the streets. Here is a non-exhaustive list of all the actions that took place during the Wall Street’s Moment of Truth campaign!
- The day before Wells Fargo’s AGM, activists organized a lock-down at Wells Fargo’s HQ in San Francisco, demanding that the bank pass a shareholder resolution calling for an end to financing for fossil expansion
- In New York, activists bird dogged Citi & JP Morgan Chase sustainability managers, which went somewhat viral across various social platforms
- Two days before Citi’s AGM, XR-NYC had 19 people arrested in an action that shut down Citi’s HQ;
- There was also an action at Citi’s HQ on the day of the AGM itself.
- The week of Chase’s AGM there were actions in New York City, Seattle, Denver, Providence, Minneapolis, Burlington, and Charlottesville that week. Activists in Seattle wheatpasted giant #DefundClimateChaos posters onto 21 Chase branches.
- At the AGM of Chubb (one of the world’s largest insurer’s of fossil fuels) in Switzerland, activists dressed up as Chubb CEO Evan Greenberg and took action outside. At the same time, RAN had a billboard truck circulating outside CEO Greenberg’s home and office in NYC.
- RAN visited the homes of 3 Bank of America executives ahead of the bank’s AGM and on the day of, activists rallied outside the bank’s HQ in Charlotte, North Carolina
An additional resolution was voted on at the Chase AGM–a proposal by Sierra Club Foundation that would require the Board of Directors to issue a report that sets absolute contraction targets for Chase’s financed greenhouse gas emissions. Chase’s current 2030 climate targets are couched in dubious metrics known as “carbon intensity” (see this Guardian article for more on this form of greenwashing) and this resolution attempted to rectify that. The resolution received 15.2% of Chase shareholder support.
In addition, more than a third of shareholders at Citi and over a quarter of shareholders at Wells Fargo voted in favor of resolutions urging the banks to improve their policies relating to Indigenous rights – especially significant numbers with major environmental implications.
Want to learn more about this shareholder season and climate resolutions? We recommend these articles:
- “How shareholders are pushing big banks for climate action,” by Manuela Andreoni, The New York Times.
- “Bank of America, Citigroup, and Wells Fargo Vote to Keep Financing Fossil Fuels,” by Kate Aronoff, The New Republic.
- “Wall Street Climate Semantics Skew Fossil-Fuel Financing Votes,” by Alastair Marsh, Bloomberg.“The long-shot campaign to get big banks out of fossil fuels,” by Rebecca Leber, Vox.