• Atmospheric CO2 /Parts per Million /Annual Averages /Data Source: noaa.gov

  • 1980338.91ppm

  • 1981340.11ppm

  • 1982340.86ppm

  • 1983342.53ppm

  • 1984344.07ppm

  • 1985345.54ppm

  • 1986346.97ppm

  • 1987348.68ppm

  • 1988351.16ppm

  • 1989352.78ppm

  • 1990354.05ppm

  • 1991355.39ppm

  • 1992356.1ppm

  • 1993356.83ppm

  • 1994358.33ppm

  • 1995360.18ppm

  • 1996361.93ppm

  • 1997363.04ppm

  • 1998365.7ppm

  • 1999367.8ppm

  • 2000368.97ppm

  • 2001370.57ppm

  • 2002372.59ppm

  • 2003375.14ppm

  • 2004376.96ppm

  • 2005378.97ppm

  • 2006381.13ppm

  • 2007382.9ppm

  • 2008385.01ppm

  • 2009386.5ppm

  • 2010388.76ppm

  • 2011390.63ppm

  • 2012392.65ppm

  • 2013395.39ppm

  • 2014397.34ppm

  • 2015399.65ppm

  • 2016403.09ppm

  • 2017405.22ppm

  • 2018407.62ppm

  • 2019410.07ppm

  • 2020412.44ppm

  • 2021414.72ppm

  • 2022418.56ppm

  • 2023421.08ppm

'Fearless Girl' facing down Wall Street's iconic 'Charging Bull' statue, symbol of the financial services industry in the financial district of Manhattan in New York City
News & Views

Banks are feeling the net zero proxy heat from critical asset owners

Proxy pressure by asset owners on financial giants to implement comprehensive and credible net zero policies is building rapidly

With the 2023 proxy season in full swing, all eyes are on net zero-related shareholder motions that are fired at the world's largest polluters and major investor darlings such as ExxonMobil, BP and Shell.

One sector seems to remain relatively underreported, however, even though it is facing more critical asset owners than ever before this year.

The financial services space is feeling the heat from its shareholders, particularly in the world's biggest market, the U.S.

So far this year, investors have filed 18 resolutions at eight banks and insurance providers, calling for improved climate-related disclosures, adopting science-based targets for 2030, phasing out lending and underwriting to companies engaging in new fossil fuel expansion, and strengthening due diligence policies on Indigenous rights.

The driving forces behind these resolutions are some of the best-known and biggest asset owners and money movers, including the New York City Comptroller, New York State Comptroller, Trillium Asset Management, Green Century Capital Management, As You Sow, and the Sierra Club Foundation, among others.

Net zero accountability

The trend clearly illustrates that, across the board, shareholder interest in net zero accountability at financial institutions is growing, with 25% of all sustainability-focused resolutions filed this year having a climate-related focus, a 12% increase from last year. 

Vermont State Treasurer Mike Pieciak called net zero issues "a systemic risk" that the U.S. financial services industry needs to address "to ensure their own solvency and to help prevent the worst outcomes of climate change." 

His office told Net Zero Investor via email: "Given the central role of banks and insurance companies will play in the green energy transition, it is critical they take these comprehensive steps to ensure the energy sector is not continuing business-as-usual but transitioning to a sustainable future."

Pieciak added: "These resolutions are calling for prudent action by financial institutions to better align their activities with their long-term climate goals.”

No alignment

According to an analysis from Ceres and the Transition Pathways Initiative Centre, which was shared with this publication, none of the U.S. banks have 2030 targets that are sufficient to align their oil and gas targets with 1.5C pathways. 

Moreover, a new Banking on Climate Chaos report found that the 8 North American banks provided over $2 trillion to fossil fuel companies since the Paris Agreement, approximately 29% of which has been provided since 2021, the year the banks joined the Net Zero Banking Alliance. 

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Financial institutions that continue to finance fossil fuel development are exposing themselves and their investors to material risks.

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Tom Di Napoli

Since 2016, JPMorgan, Citi, Wells Fargo, and Bank of America have consistently been among the top five financiers of companies engaging in fossil fuel expansion.

Similarly, insurers in the U.S. lag far behind their European counterparts in their policies on oil and gas, and shareholders are demanding they take action.

Travelers, for example, has $4.71 billion in fossil fuel investments, according to the California Department of Insurance, as of 2019.

Asset owner pressure building

Brad Lander, New York City Comptroller, also sees that the pressure from asset owners on financial institutions is building rapidly.

Landner pointed out that three of the five NYC pension funds have set ambitious goals for reaching net zero across their investment portfolios by 2040.

"[These] goals require concerted action by portfolio companies and fellow investors to advance the transition to a low-carbon economy," he said.

"Those three funds will support resolutions that ensure financial institutions align their financing with long-term climate goals, and we hope our fellow shareholders join us."

Meanwhile, New York State Comptroller Tom Di Napoli filed exempt solicitations at Citi, Bank of America, Wells Fargo, JP Morgan Chase, Morgan Stanley, and Goldman Sachs.

He is urging shareholders to vote in favour of the fossil fuel phase out resolutions and the absolute emissions targets resolutions.

In encouraging investors to support the resolutions, Di Napoli said that “these financial institutions lag peers and fail to meet investors’ climate action expectations” as justification for warranted votes.

“Failure to achieve net zero greenhouse gas emissions by 2050 at the latest and limit global warming to 1.5-degrees Celsius poses enormous risks to the global economy, with estimates of global losses from climate change of 10% of total economic value by mid-century," he noted.

"Financial institutions that continue to finance fossil fuel development are exposing themselves and their investors to material risks associated with the systemic impact of climate change and the transition to a low carbon economy," Di Napoli argued.

He singled out the Intergovernmental Panel on Climate Change and the International Energy Agency, as they both predicted "that net-zero alignment requires no new fossil fuel supply as of 2021.”

The likes of JPMorgan

Getting to net zero is not realistic if large financial institutions, such as JPMorgan, are not fully throwing their weight behind ambitious climate goals, argued Kelly Hirsch, head of ESG at Vancity Investment Management.

"They are crucial to reducing emissions ‑ that means setting and achieving absolute reduction targets," Hirsch told Net Zero Investor.

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Banks are crucial to reducing emissions ‑ that means setting and achieving absolute reduction targets.

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Kelly Hirsch

One remarkable development came last week, when Legal & General Asset Management, a top 20 shareholder in four major U.S. banks, announced its intentions to support the resolutions on phasing out financing for fossil fuel expansion at all American banks and the resolutions on disclosing transition plans and absolute emissions targets at all banks where the resolutions were filed.

In consideration of the need for an orderly and just transition, LGIM said “...boards of financial institutions need to closely consider their strategy and risk appetite towards fossil fuels into the near future. As such, we believe that many of the proposals that ask the board to devise their own time-bound phase-out strategy are supportable.”

Hirsch stressed that most investors "are not asking, in our support of the resolutions, to immediately end all fossil fuel financing, we are asking that financial institutions ensure they aren’t financing expansion of fossil fuel development and that they have credible targets and plans to get there.

"We won’t get to a net-zero economy if we don’t start now."


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