The Church of England Pensions Board (CEPB) has pre-declared its intention to vote for clean energy shareholder proposals at the upcoming AGMs of Bank of America, Goldman Sachs, and Morgan Stanley.
Put forward by the Comptroller for the City of New York, the proposals call on the three major banks to disclose their annual Clean Energy Financing Ratio, a metric showing the bank’s total financing, through equity and debt underwriting and project finance, of low-carbon energy supply as a proportion of fossil fuel financing.
“These are reasonable proposals that we are pleased to support on the basis that it will help us assess the transition plans, strategy, and resilience of these banks,” said Laura Hillis, director of climate and environment at CEPB, which has around £3.2bn of assets under management.
CEPB’s decision comes as it recently added 12 global banks to its climate change focus company list and is now engaging with them on a range of topics material to the bank’s role in addressing climate change and the energy transition.
“Banks are key to the transition to net-zero – and we are concerned they’re simply not transitioning away from fossil fuel financing quickly enough,” said Hillis.
“Despite all the risks inherent in a disorderly transition to net zero, fossil fuel lending from these three banks remains among the highest in the banking sector.”
In 2023, Bank of America updated its Environmental and Social Risk Policy Framework, which some saw as rolling back on its sustainability-linked policies.
Previously the bank had said it would not directly finance oil and gas projects in the Arctic, new or expanded coal-fired power plants, or new or expanded thermal coal mines.
However, those projects would now go through “enhanced due diligence”, according to the revised framework, as opposed to being placed under a “business restrictions’’ category, typically reserved for projects or activities that the bank does not engage in.
According to the International Energy Agency, annual financing to the renewable energy sector needs to double from $2.8bn to $4.7bn by the end of the decade for international climate goals to be achieved. Yearly investments into fossil fuels would also need to fall by 60%.
Morgan Stanley’s AGM is due to be held on Thursday 23 May. In a note to shareholders the bank’s board said it unanimously recommended shareholders to vote against the Clean Energy Supply Financing Ratio proposal.
Both Goldman Sachs’ and Bank of America’s AGMs will take place on Wednesday 24 April and they have also urged shareholders to vote against the proposal.
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