Climate activist shareholders are gaining support, but not where it counts

Climate activist shareholders are gaining support, but not where it counts

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Climate activists failed to garner majority support for climate-related shareholder resolutions at three top US banks on April 26. While outperforming previous efforts, the three shareholder motions to end financing for fossil fuel expansion at Citi, Bank of America, and Wells Fargo only garnered 12.8%, 11%, and 11% of the votes, respectively.

The measures would have directed management to stop financing the expansion of fossil fuel production, in line with the Paris Agreement’s climate goals based on International Energy Agency modeling. Although not legally binding, successful shareholder resolutions put pressure on the company’s board members to execute them, at the risk of being voted out.

Similar proposals are gaining momentum at the world’s top fossil fuel financial institutions. A record number of emissions-related proposals were filed at banks and other companies this year after the Securities and Exchange Commission relaxed its standards and made it easier for shareholders to demand changes to a company’s carbon-emitting operations (as opposed to merely demanding disclosure or changes in lobbying).

Climate resolutions need asset manager backing to win

In the last few years, climate-focused shareholder activists have been gradually building support, and even winning for the first time. But they face steep odds without the support of big asset managers. Although BlackRock CEO Larry Fink has often cited climate as a major financial risk for many companies, he and his peers typically vote against one-third of climate-related resolutions, and are more likely to support those related to lobbying policy than curbing a company’s carbon footprint.

Although these firms don’t routinely disclose their votes right away, the recent votes at Citi, Bank of America, and Wells Fargo imply the biggest asset managers voted against the proposals, said Jason Opeña Disterhoft, a senior climate finance campaigner at Rainforest Action Network. A spokesperson for BlackRock said the company’s policy is not to comment on specific proposals.

A slate of similar proposals at Canadian banks also failed earlier this month. But the voting season is just heating up—more climate votes are coming in the next few weeks at energy companies and financial institutions. The next, on April 29 at Credit Suisse, has a brighter outlook after securing the support of two major UK asset managers.

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