Wells Fargo, Citi, BofA Shareholders Rebuff Climate Proposals

Shareholders at Bank of America, Wells Fargo and Citigroup voted against a series of climate proposals on Tuesday at the banks’ annual meetings.

Activist shareholders had proposed a slew of proposals seeking sweeping climate commitments such as a phasing out financing of new fossil fuel exploration and development. The proposals added to regulatory pressure by the Biden administration over the financial industry’s climate impact.

The proposal calling on Bank of America to cease financing new fossil fuel exploration and development secured only 7% support. Another environmental proposal gained support from 28.5% of investors. That proposal pushed Bank of America to release a transition plan about aligning its financing activities with its 2030 greenhouse gas emissions reductions targets.

Investors also rejected a proposal for Bank of America to disclose its 2030 absolute greenhouse gas reduction targets for energy sector lending and underwriting, which received 11.5% support. Reporting absolute emissions is a more rigid approach than disclosing emissions intensity targets, which measure emissions relative to economic output.

“Bank of America has set only intensity targets, which paint an incomplete picture of the bank’s progress toward meeting its own net-zero commitments,” Eri Yamaguchi, a senior corporate governance officer at the New York State Common Retirement Fund, said at the company’s annual meeting.

The fund’s absolute emissions proposal said emissions from the oil and gas industry are responsible for over 40% of global greenhouse gas emissions “and are therefore significant to Bank of America’s climate-risk mitigation strategy.”

Bank of America declined to comment Tuesday. The bank noted in its proxy statement that it has set and disclosed 2030 targets for reducing emissions related to auto manufacturing, energy and power generation. The bank added that it has committed to setting and disclosing “financing activity emissions reduction targets for other key high-emitting sectors” by April 2024.

Wells Fargo

At Wells Fargo’s meeting, investors voted against a Sierra Club Foundation proposal asking that the bank adopt a policy for “a time-bound phase-out” of its lending and underwriting to projects and companies engaged in new fossil fuel exploration and development.

Without such a phase-out policy, Wells Fargo is “unlikely to meet its climate commitments and merits scrutiny for material risks” including greenwashing, reputational costs, and even scrutiny from the Federal Reserve the proposal said. The bank said in its proxy statement that it doesn’t believe restricting financing to the oil and gas sector “is reasonable, given the significant adverse impact that curtailing financing to this sector would have on the US and world economies.”

Wells Fargo told Bloomberg Law after the meeting: “We respect feedback from our shareholders and will carefully consider their recommendations regarding their proposals.”

Dan Chu, executive director of the Sierra Club Foundation, said at the meeting that there’s possible reputational damage that comes from misleading climate commitments. Chu noted that litigation challenging misleading environmental claims are on the rise, and that high-profile activist campaigns pressing banks to stop financing fossil fuel projects are also mounting.

“Locking us into decades of new fossil fuel emissions makes no sense,” Chu said.

Jessye Waxman, a senior campaign representative at the Sierra Club said in a statement after the vote: “The fact that so many investors voted against asking banks to reconcile their climate pledges with their fossil fuel financing activities suggests that most investors still don’t understand that climate change poses a systemic risk to their entire portfolios and the economy.”

Citi

At Citi, Harrington Investments filed a proposal very similar to the Sierra Club’s bid at Wells Fargo, seeking a report to adopt a policy for “a time-bound phase-out” of the bank’s lending and underwriting to projects and companies engaged in new fossil fuel exploration and development.

The resolution, which gained nearly 10% support, asked that the bank adopt a policy that aligns with its public commitments to international agreements like the UN Environmental Programme Finance Initiative, and the International Energy Agency Net Zero by 2050 Roadmap, said Brianna Harrington, research analyst and shareholder advocacy coordinator at the firm ,during the meeting.

In response to a question related to the proposal, Citi CEO Jane Fraser said the bank is “committed to help drive the transition to a low-carbon economy” as a business opportunity. At the same time, Fraser said investing in “energy security is also essential” because the global economy can’t operate without fossil fuels.

“That’s because we simply don’t yet have affordable alternatives at the scale and right reliability that is required,” Fraser said. “And that’s why we’re actively supporting the development of the next generation of affordable technologies, and financial innovations as they’re needed to really accelerate this shift.”

Another proposal asked the bank issue a report outlining how effective its policies are respecting Indigenous Peoples rights. Specifically, the Sisters of St. Joseph of Peace, a New Jersey-based Catholic advocacy group, called out the bank for financing pipeline multinational company Enbridge Inc. The vote failed with about 31% of the vote.

A spokesperson for Citi declined to comment. The bank said in its proxy statement that it is “committed to respecting human rights wherever we do business,” and said Enbridge has “industry-leading engagement policies” with respect to human rights and Indigenous Peoples issues.