The Dean of Wall Street CEOs is Green. JPMorgan Chase today struck a deal with three New York City pension funds investing in the bank worth $478 million to reflect its clean energy ratio in fossil fuel financing. According to NYC Funds, the metric will give investors a more comprehensive view of how the bank is progressing on its net zero emissions goals and whether it is accelerating its clean energy financing activities over time.
The merger with JPMorgan’s three NYC funds, which manage a combined $193 billion in assets, will result in the withdrawal of their shareholder proposal, which they have filed against the six major banks. It makes JPMorgan the first of the banks to strike deals with investors. The others—Bank of America, Citigroup, Goldman Sachs, Morgan Stanley, and Royal Bank of Canada—still have proposals pending and the NYC Comptroller’s Office is engaging with them. In January the pension fund announced it was launching a drive to get banks to submit more data on their climate transition commitments.
Research by Bloomberg New Energy Finance found that to keep average global warming below 1.5 degrees Celsius, which is optimal, the ratio of investment in low-carbon energy to fossil fuels needs to reach at least 4 to 1 by 2030. is the. There, the ratio needs to increase from 6 to 10 in the next decade, and 10 to 1 thereafter. In 2021, Bloomberg research found that for every dollar spent supporting fossil fuels, 0.8 supported low-carbon energy. JPMorgan’s estimated ratio was 0.7.
A JPMorgan spokeswoman said it will take time to figure out how to best disclose the metrics investors are asking for.
“We have found common ground with the NYC Comptroller on revealing a clean energy financing ratio with the understanding that it is going to take us some time and resources to decide on an efficient path,” a spokesperson said. fate. “We will engage with NYC and our shareholders to provide the market with greater clarity and transparency about our activities and what the transition financing event looks like.”
In 2021 the Bank announced a $1 trillion target to finance initial steps in promoting the transition to a low-carbon economy. However, the funds pointed out in its proposal that JPMorgan offers more financing for fossil fuels than any other bank, up to $434 billion since 2016, despite its commitment to achieve net zero emissions by 2050, the NYC funds said.
The move comes just weeks after JPMorgan Asset Management and State Street were criticized for dropping the Climate Action 100+, a coalition of investors focused on working together to target companies that are also greenhouse gas emitters. are the largest emitters of gases. Since then, the Pacific Investment Management Company (Pimco) announced that it would also leave the group, bringing the total assets under management to $19 trillion. (BlackRock transferred its participation in C100+ to BlackRock International.)
Asset management companies pointed to their freedom in withdrawing from the C100+, noting that the group previously focused on clear disclosures and not seeking specific actions. This strategy is set to be replaced by a second phase strategy this year. It also coincides with a movement towards anti-ESG proposals and rhetoric that has led conservative groups and politicians to criticize financial services firms for “woke” to compensate for the loss of financial returns. .
A spokesperson for the Climate Action said fate That the antitrust laws are not meant to prevent investors or companies from working together for purposes that are not anticompetitive “that they have each independently decided is in their best interests.”
The group cited an analysis by the Columbia Center on Sustainable Investment that found antitrust laws had a significant impact on “the private sector action necessary to address climate and other sustainability-related challenges.”
J The Wall Street Journal He reported this week that BlackRock has dropped the term “ESG” from its public statements and that CEO Larry Fink is no longer using it in his annual letters. Instead, “transitional investing” is the new way to talk about ESG Journal reported.
Still, regardless of the words companies use to discuss it, investors—especially pension funds—focus on the risk of climate change and engage with companies on their net-zero commitments. In 2023, a record 643 environmental or socially relevant shareholder proposals were filed at public companies, a high water mark that is expected to continue into 2024, according to a report by investor advisory firm Institutional Shareholder Services.
Issues related to climate change are expected to generate the most proposals from shareholders to companies, the ISS report found, and some investors are asking financial services firms to reduce client greenhouse gas emissions and become net-zero by 2030. To report any errors between targets.
