Top US banks face calls to wind down fossil-fuel financing

[April 25, 2023]  By Ross Kerber
 
(Reuters) - Three large US banks face shareholder calls on Tuesday to wind down fossil fuel financing, a balancing act for them and their top investors who are also under political pressure from the other side to maintain support of the oil and gas industries.

Demonstrators listen to speakers from the Sierra Club local Virginia Chapter speak during a rocking-chair vigil rally demanding banks to stop funding fossil fuel projects at Franklin Park, in Washington, U.S., March 21, 2023. REUTERS/Tom Brenner

The resolutions were filed by climate-minded investor activists at Bank of America, Citigroup and Wells Fargo & Co. All three banks say the nonbinding measures calling for policies to phase out lending and underwriting for new fossil fuel exploration and development are not necessary given their other commitments to reaching net-zero emissions by 2050.

Similar resolutions won no more than 13% support at the banks' meetings last year. Proponents including the Sierra Club Foundation loosened the language this year partly by dropping a call for a planning deadline.

Vote results at the banks' annual meetings will show how big Wall Street firms practice concerns for environmental, social and governance (ESG) issues. U.S. Republican politicians accuse Wall Street of embracing ESG matters over profits, while climate protesters spray painted graffiti on two New York bank offices on Monday.

Heidi Welsh, executive director of the Sustainable Investments Institute, which tracks shareholder votes, said support from 20% or more of each bank's investors would be significant for the activists. "If you get at least 20%, then you're in the game," she said.

Ben Cushing, a Sierra Club campaign director, said the resolution results should be seen in context with how other environmental proposals fare. Together the resolutions, Cushing said, "represent a substantial challenge to big banks’ narrative that they are adequately managing and mitigating climate risks."

Investors including Britain's Legal & General have voiced support for the phase-out proposals. But on Monday, without naming individual banks, Neuberger Berman leaders wrote they oppose phase-out resolutions since the targeted banks "are highly transparent in their disclosure of business exposures and lending strategies."

(Reporting by Ross Kerber, additional reporting by Tatiana Bautzer; Editing by David Gregorio)

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