Americaโs largest bank is shunning calls from shareholders to disclose its full emissions, despite warnings from its own economists that โcatastrophicโ climate change could end up threatening human life โas we knowย it.โ
JPMorgan Chase, which a coalition of U.S. environmental groups recently claimed is the worldโs largest financer of fossil fuels, has instructed its shareholders to vote down a proposal for the bank to report the emissions of its lending activities at its upcoming annual general meeting (AGM) on Mayย 19.
Now treasurers from eight U.S. states are joining a call for JPMorgan to elect an independent board chair who will guide the companyโs financing to align with the Parisย Agreement.ย
The bank has also faced pressure from shareholders this year for encouraging Lee Raymond, former CEO of ExxonMobil, to stay on as a member of JPMorganโs board. Exxon has donated tens of millions of dollars to organizations casting doubt on anthropogenic climate change, including under Raymond, who later this year will step down from leading JPMorganโs board but remain a director. The group of state treasurers also oppose Raymond staying on theย board.
We must address the financial and climate risks to @jpmorgan associated with fossil fuels.
That’s why we’re voting โnoโ on Lee Raymondโhis excessive tenure, climate change denial and fossil fuel connections prove he can’t be an independent director.https://t.co/g7e4Xzdr9i
โ Scott M. Stringer (@NYCComptroller) April 22, 2020
โAs part of a broader plan for the bank to seriously grapple with the risks climate change poses to investors, Raymond should plan to retire from the board entirely,โ said Maryland State Treasurer Nancy Kopp in a statement. Kopp and state treasurers of Connecticut, Maine, Massachusetts, Oregon, Rhode Island, Vermont, and Wisconsin united with efforts of the Pennsylvania treasurer, comptrollers of New York City and New York State, and the California public employee retirement program in pressuring JPMorgan on its climateย governance.
Shareholders Pushing JPMorgan onย Climate
While JPMorgan touts the โleadership roleโ it says it has taken to address the โchallenges and opportunities of a carbon-constrained environment,โ climate activist shareholders are calling for it to publish โif and howโ it plans to put its investments in line with the goals of the Paris Agreement and whether it is considering setting emissions reduction targets for its lending. Activist shareholders increasingly have been using the AGMs of fossil fuel companies and their funders to push for climate action from the inside.ย ย
JPMorgan currently only publishes the emissions produced by the bankโs own operations, with its first โclimate change reportโย released last year stating that it was โfocused on defining and obtaining the right dataโ on its clientsโ โclimate-related riskโ but that it was at the โearly stages of thisย journey.โ
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Another proposal to be considered at the AGM next week, put forward by Trillium Asset Management, a Boston-based company focused on socially responsible investing, urges the bank to outline how it plans to respond to โrising reputational risksโ relating to its investments in the controversial Canadian tar sands and oil and gas companies operating in theย Arctic.
JPMorgan announced in February that it would stop financing companies involved in thermal coal and new Arctic oil and gas development, while increasing its financing ofย renewables.
Over the past 3 years @Chase has lent $196 billion to the fossil fuel industry; if you look at the worst projects, they’ve lent 63% more than anyone else. They are the Doomsday Bankhttps://t.co/bYwZQdYiSA
โ Bill McKibben (@billmckibben) February 24, 2020
But Trilliumโs proposal argues that the bank is the โlargest global lender and underwriterโ to the top 30 companies already operating in the Arctic, as well as the top 34 companies involved in the Canadian tarย sands.
The bankโs Board of Directors are advising shareholders to vote against both motions, in a move that activists argue puts them at odds with their Americanย peers.
A recent report by the Rainforest Action Network (RAN) said JPMorgan had become โthe first bank to blow past the quarter-trillion dollar mark in post-Paris fossil financing, with $269 billion inย 2016-2019.โ
RANโs findings have galvanized shareholder calls for banks to phase out fossil fuels, with activists pointing to RANโs research to push for change at JPMorganโs AGM.
Bank Resists โModerateโ Carbon Footprintย Proposal
Danielle Fugere, President of shareholder advocacy group As You Sow, which filed the proposal on carbon emissions disclosure, told DeSmog: โWhat we are asking them to do is measure, disclose, and setย a target to become Parisย aligned.โ
โWe are asking thisย not only because climate change poses risk to the bank, but because it poses systemic risk toย shareholders.โ
โMany U.S. banks are waiting for a perfect system to emerge for them to begin measuring climate risk โ if they wait for that, itโll be too late โ we are really trying to press them to move faster than they may think they need to,โ sheย added.
Yet, in a position that Fugere feels is out of step even with its fellow American investment banks, JP Morgan has resisted what she calls a โmoderateโ proposal to commit to and report on a plan to reduce so-called โfinanced emissionsโ produced by the companies to which itย lends.
โThe global financial system has a small window of opportunity to reduce financing of high-carbon activities or risk catastrophic levels of #globalwarming. Banks no longer have a free pass to fund high-carbon activities.โ @Danielle_Fugerehttps://t.co/ofJuUv61DS
โ As You Sow (@AsYouSow) March 12, 2020
Defending its current approach on climate change in response to the proposal, JPMorgan arguesย it provides โtransparent disclosure of our approach to and performance on environmental, social, and governance (ESG) topics through multiple channelsโ and โsupports public sector leadership to drive carbon emissions reductions on a globalย scale.โ
In response to the proposal on oil and gas developments in the Arctic and Canadian tar sands, JPMorgan pointed to its recent commitment to end project financing for new Arctic developments and said both Arctic and tar sands developments were โsensitive sectorsโ and therefore subject to โenhanced reviewโ by its Global Environmental and Social Risk Managementย team.
Alison Kirsch, a researcher for RAN, told DeSmog their research showed TC Energy, the infrastructure company formerly known as TransCanada that is building the controversial Keystone XL pipeline, was the bankโs โsingle biggest fossil fuel clientโ between 2016 and 2019. Following TC Energyโs announcement in March that it would be proceeding with the project, designed to carry oil from Canadaโs tar sands region to U.S. refineries, JPMorgan led a $1.25 billion bond issuance for TC Energy, along with the multinational bankย Citi.
Kirsch called JPMorganโs Arctic announcement โsmall potatoes in light of what it needs to do to stop being a climateย villain.โ
As You Sowโs Fugere argues the bankโs gradual shift on fossil fuel financing is leaving it behind the curve. Over the last year As You Sow has researched the investments of five leading U.S. financiers and filed similar shareholder proposals with Goldman Sachs, Wells Fargo, Morgan Stanley, and Bank ofย America.
Those banks have appeared to shift to accommodate shareholdersโ requests, Fugere says, leading the group to withdraw their motions, โbecause those banks agreed to begin the process of finding an appropriate method for measuring their carbonย footprints.โ
JPMorgan Chase is, by contrast, resisting such pressure ahead of its AGM and instead directing its shareholders to vote against theย proposal.
Eli Kasargod-Staub, cofounder of shareholder activist nonprofit Majority Action, says JPMorganโs next shareholder meeting will be aย โlitmus testโ for big asset managers such as Vanguard and BlackRock, which together hold nearly 15 percentย of shares, to see if they are really committed to their pledges on climateย change.
JPMorgan declined to provide comment for this article when approached byย DeSmog.
Main image:ย Top of JPMorgan Chase Tower, Dallas, Texas, in 2013. Credit:ย Joe Mabel,ย CC BY–SAย 3.0
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