New York State pension fund urges bank shareholders to support climate resolutions

The New York State Common Retirement Fund has called on shareholders to support resolutions demanding tougher fossil fuel funding policies at some of the world’s largest banks, one of the first such steps taken by a large pension fund.

The $280 billion fund on Monday called on shareholders to vote in favor of proposals filed with six major lenders – including Bank of America, Goldman Sachs and JPMorgan Chase – asking the groups to align their fossil fuel financing policies with the goal of net zero emissions by 2050.

This would mean ensuring that funding does not contribute to “new fossil fuel supplies” that would be incompatible with reaching net zero, the proposals say.

Shareholders should support these resolutions because “financial institutions have a key role to play in decarbonizing the global economy and addressing the systemic risks posed by climate change,” the fund said in a letter.

The climate impacts of big banks’ lending and underwriting activities are increasingly in the spotlight, under pressure from shareholders, activists and celebrities.

The six banks targeted by the New York State Common Retirement Fund, which also included Citigroup, Morgan Stanley and Wells Fargo, have joined Mark Carney’s Net-Zero Banking Alliance (NZBA) which commits them to decarbonizing their portfolios by the middle of the century.

“To ensure these commitments are credible, they must adopt policies that eliminate funding for the exploration and development of new fossil fuels,” the pension fund said Monday. The six banks have recommended that shareholders vote against the fossil fuel financing proposals.

Financial institutions have become a focal point for campaigners, and a series of climate-related proposals have been tabled ahead of banks’ annual general meetings this season.

Last week, lenders including Royal Bank of Canada (RBC), Canadian Imperial Bank of Commerce and Scotiabank pushed back on proposals calling for tougher climate policies, though one filed with RBC asking the bank to hold an annual vote on its climate plans won 22% of the vote.

Pressure has also come from celebrities, including Hollywood actor Mark Ruffalo, who does business with RBC-owned City National Bank. A public letter signed by Ruffalo, along with actors Scarlett Johansson and Jane Fonda, calls on RBC to “stop funding fossil fuel expansion.”

“They haven’t really engaged with us since that letter came out, which is really shocking to me,” Ruffalo told the Financial Times. “For us to deal with climate change, we have to deal with the financial system.”

Many polluting fossil fuel groups, such as Canada’s tar sands oil producers, are banking on carbon capture and storage (CCS) technology, rather than a drop in production, to reduce emissions.

But that wouldn’t necessarily help banks reach their net-zero goals: while CCS could reduce production emissions, substantial volumes of carbon would still be emitted when the fuel was used. Under NZBA rules, banks must account for these issues.

Video: Carbon Capture: Hopes, Challenges and Controversies | FT Movie

Climate capital

Where climate change meets business, markets and politics. Check out the FT’s coverage here.

Curious about the FT’s commitments to environmental sustainability? Learn more about our scientific goals here

Dolores W. Simon