JPMorgan Hopes to Block Shareholder Climate Risk Resolutions



By Karen Savage


Banking giant JPMorgan Chase & Co. grabbed headlines Tuesday when it announced plans to phase out financing of coal production and use, and not fund fossil fuel development projects in a U.S. Arctic wilderness. But the firm is still trying to block shareholders from forcing it to reveal its exposure to climate risk and commit to additional climate action.


The three resolutions, which were filed by three institutional investor members of the Interfaith Center on Corporate Responsibility, ask JPMorgan to disclose its exposure to climate risks that could threaten the value of their share holdings, as well as plans for ending fossil fuel lending and lowering the carbon footprint of all lending. The Interfaith Center is a coalition of 300 shareholder advocates who view the management of their financial investments as a catalyst for social change.


The Securities and Exchange Commission is expected to respond to JPMorgan’s request for permission to block voting on the proposals prior to the bank’s annual general meeting, which is typically held in May.


"We think today’s announcement is an important first step, but it's nowhere near where they need to be in terms of reducing their climate impact,” said Danielle Fugere, president of As You Sow, a nonprofit organization that works with shareholders to advocate for corporate environmental, climate, and social responsibility. The group's shareholder resolution asks JPMorgan to report on its plans to measure and reduce the greenhouse gas emissions associated with its lending activities to a level in line with the Paris Agreement.


"The company has not been willing to do that,” said Fugere.


Fugere welcomed JPMorgan's promise that by 2024, it would end lending to companies that get the majority of their revenue from coal extraction, as well as funding for coal-fired power plants. The firm has also stated that it will not provide financing for oil and gas drilling on the coastal plain of the Arctic National Wildlife Refuge, a vital wildlife wilderness habitat that the the Trump administration has targeted for drilling.


But these activities represent only a small portion of the firm's overall stake in fossil fuels, according to Fugere. “This can't be greenwashing,” she said. “This has to be a first step in very quick action to reduce their carbon impact."


The bank also announced that it has signed on to Climate Action 100+, an investor initiative to ensure that the world’s largest corporate greenhouse gas emitters take the actions necessary to slow down and lessen the effects of climate change.


The announcement, which came as protestors for climate action gathered outside the firm’s annual investors day in New York City, made no mention of fracking, Canadian tar sands projects, ongoing oil and gas drilling in the Arctic, or capital funding of companies involved in Arctic oil and gas extraction.


"To the issues of the Arctic and tar sands, I'd say it's a mixed bag,” said Jonas D. Kron, senior vice president and director of shareholder advocacy at Trillium Asset Management. “I think it shows a responsiveness to the concerns expressed in the proposal, but it could go a lot farther.”


Trillum has filed a resolution that asks JPMorgan to explain its plans for addressing the growing reputational risks associated with its financing of tar sands projects, as well as remaining interests in Arctic oil and gas drilling.


The third proposal, filed by Boston Trust Walden, asks the bank to share its proxy voting policies and 2019 proxy voting record related to climate change.


Shareholder resolutions involve non-binding recommendations that investors present to companies, which can review and accept or reject them for voting by shareholders at its annual meeting. These proposals are often related to issues where shareholders believe a company needs to improve the environmental and social impacts of its activities.


Companies can ask the SEC for permission to exclude voting through what’s referred to as a “no action letter.” Based on its guidelines, the SEC will then determine whether the company is allowed to block the proposal.


JPMorgan "filed 'no action letters' against every single proposal,” said Fugere. "What that says is that JPMorgan thinks we cannot even ask the questions, we cannot ask them what they're doing, we cannot ask them to think about how their portfolio is affecting climate.”


JPMorgan did not immediately respond to a request for comment.


JPMorgan is the largest financier of the fossil fuel industry as a whole and among the top financiers of tar sands oil, Arctic oil and gas, ultra-deepwater oil and gas, fracking, and liquified natural gas projects, according to Banking on Climate, a report released last year by the Rainforest Action Network and other environmental groups.


The report described JPMorgan as “very clearly the world’s worst banker of climate change,” with $196 billion of financing in fossil fuels between 2016 and 2018, an amount far higher than second-place Wells Fargo.


Sinking that much money into projects that harm the climate poses a risk to the company’s reputation, according to Kron, who said investors at Trillium have been particularly concerned with protests surrounding TransCanada's Keystone XL and Enbridge’s Line 3 pipelines, as well as the Arctic National Wildlife Refuge in Alaska, which the region's Indigenous Gwich'in people and environmentalists have fought to protect from drilling for decades.


A coalition of House members led by Representative Jared Huffman, D-Calif., last week sent a letter to JPMorgan, along with Wells Fargo & Co., Citigroup, Bank of America Corporation, and Morgan Stanley, urging the banks to refuse to finance oil development in the Arctic Refuge. “As the world rapidly shifts towards clean energy sources, we are gravely concerned about the climate, financial, and reputational risks associated with pursuing a speculative fossil fuel source that will likely become uneconomical,” the letter stated. “It is both deeply unethical and unwise to permanently destroy lands vital to the culture and existence of the Gwich'in people to pursue this high-risk gamble.”


It is not clear whether the letter from lawmakers contributed to JPMorgan's decision not to fund Arctic Refuge drilling.


JPMorgan is also a funder of the Coastal GasLink fracked gas pipeline in Canada, which is opposed by the hereditary chiefs of the Wet’suwet’en Nation and has sparked solidarity protests throughout North America.


"JPMorgan is getting an enormous amount of public pressure related to its relationship with companies doing business in the Arctic and in tar sands,” said Kron, and such publicity and protests can do more than just turn off consumers. It can also affect employee recruitment and turnover, he said. "If nobody wants to work for you, when your employees are disgruntled or unhappy, or your employees are leaving, that's a business problem too."


Environmental activists routinely target JPMorgan for its financing of fossil fuels, with nation-wide protests planned for mid-April. An online video of Jane Fonda cutting up a JPMorgan Chase credit card has been viewed nearly half a million times.


“Even if they're able to produce piles of spreadsheets and piles of computer models that say financially, this makes sense, a lot of people aren't going to listen to that and aren't going to care,” Kron said. “A lot of people are going to continue to protest, a lot of people are going to continue to hang banners from the bank, a lot of employees are going to start to feel squeamish.”

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