Top US banks face little investor pressure on fossil-fuel financing

Top US bank investors gave only slim support on Tuesday to shareholder resolutions calling for the lenders to wind down new fossil fuel financing, setbacks for climate activists who had hoped for new constraints on the oil and gas industries.

The resolutions won only about 10% support of votes cast at Citigroup Inc (C.N) and 7% at Bank of America,(BAC.N) bank executives said during their annual shareholder meetings held online. Investors rejected a similar resolution at Wells Fargo & Co, (WFC.N) said executives, though they did not give an exact tally.

Heidi Welsh, executive director of the Sustainable Investments Institute, which tracks such votes, had said the non-binding items needed 20% support to get much traction.

Given Tuesday's tallies, "It seems pretty clear that the big banks are going to keep financing fossil-based energy development, even though that is enabling the growing systemic risks and costs that are already hitting us from climate change," Welsh said. 

Welsh and activists pointed to other signs investors remain concerned about climate matters. For instance a resolution calling for Citi to report on its concern for the rights of Indigenous peoples, which had an environmental component, won 31% support, typically enough to draw boardroom attention.

The phase-out resolutions from proponents including the Sierra Club Foundation called for new bank policies to step back from lending and underwriting new fossil fuel exploration and development. They were seen as an important test of investor sentiment after similar ones fared badly last year.

Sierra Club representative Jessye Waxman said in a statement the results showed most investors are not aligning their proxy votes with their environmental positions.

"As the climate crisis worsens, investors must move beyond calls for disclosure only and demand companies take real steps to align their business practices with their stated climate commitments," Waxman said.

All three major US banks had opposed the resolutions, citing their other efforts to achieve net-zero by 2050.

Citi CEO Jane Fraser said during her bank's meeting that while global emissions must be reduced, "we simply don't yet have affordable alternatives at the scale and reliability that is required" to move national economies off of fossil fuels.

Reuters