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Energy Efficiency

Wall Street Banks Face New Pressure to Cut Fossil-Fuel Financing

A Valero Energy Corp. refinery in Corpus Christi, Texas, U.S., Friday, Feb. 19, 2021. Natural gas futures fluctuated Friday as an energy crisis plaguing the central U.S. eased amid an outlook for milder weather and a decline in blackouts. Photographer: Eddie Seal/Bloomberg

(Bloomberg) —

Wall Street banks, including Goldman Sachs Group Inc. and JPMorgan Chase & Co., are facing calls from shareholders to take faster action to address their role in financing climate change.

The Sierra Club Foundation and Trillium Asset Management are part of a group that filed nine resolutions with six banks, requesting that they ensure their financing doesn’t add to new fossil-fuel supplies as required by the International Energy Agency’s so-called 2050 scenario. 

The shareholders also asked some of the banks for an audited report on whether and how fulfilling the IEA’s 2050 scenario may affect assumptions in financial filings, such as the magnitude of stranded assets, declining commercial credit quality and increased regulatory capital requirements. Banks have organized about $555 billion of bonds and loans for the oil, gas and coal sectors this year, down from $683 billion in 2020, according to data compiled by Bloomberg.

“If banks fail to adjust their practices accordingly, it will present enormous risks to our communities, our economy, and banks’ own profitability,” Dan Chu, executive director of the Sierra Club Foundation, said in a statement from investor group Interfaith Center on Corporate Responsibility.

The proposals from the Interfaith Center were filed with Goldman Sachs and JPMorgan, as well as Bank of America Corp., Citigroup Inc., Morgan Stanley and Wells Fargo & Co. The six banks have joined the Glasgow Financial Alliance for Net Zero, a group that has pledged to meet climate goals outlined in the 2015 Paris agreement.

Investors have been pressing companies to address their role in climate change, and that pressure is mounting. Shareholder proposals related to environmental and social issues got an average 33% support from investors during the last proxy season, the highest since 2016, according to Bloomberg Intelligence. About a fifth of the 185 proposals were approved, the highest in the period.

© 2022 Bloomberg L.P.

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