Bank of America, Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo are facing shareholder resolutions over their stated ambitions to reduce emissions by 2030 as part of net-zero goals.
On Tuesday, As You Sow filed proposals at the banks, which the group and others have previously done in 2019 and 2020. Those resolutions follow the release of data from the Sunrise Project and several groups showing that major banks around the world have only an average of 7% of their energy-related financing going toward renewables. That data, compiled by sustainability research group Profundo was distributed widely to journalists on Tuesday.
“It is critical that US banks be clear with investors about how they intend to meet their 2030 goals,” As You Sow president Danielle Fugere said in an announcement from the organization. “While public policy, technology, green funding and client progress all have a role to play in accomplishing these goals, banks must affirmatively acknowledge that every decision they make has climate implications. Owning that space and disclosing how they are working to deliver on their net-zero goals creates accountability and clarity on the path to net zero.”
Several of the banks are the largest lenders associated with fossil fuels, according to As You Sow. However, all of the banks the group has engaged with have set 2030 emissions reduction targets, particularly around auto manufacturing, energy and power. All of the banks are also members of the Net-Zero Banking Alliance.
Research published Tuesday by the Sierra Club, Fair Finance International, BankTrack and Rainforest Action Network for 60 banks found that among $2.4trn in loans and bond underwriting associated with energy between 2016 and mid-2022, $2.3trn of that total went to fossil fuels and $178bn was for clean energy. The groups did not count financing for nuclear, blue hydrogen, carbon capture or carbon offsetting as clean energy underwriting.
Financing for fossil fuels declined from more than $443bn in 2019 to $299bn in 2021, while lending for renewables increased during that time from $26bn to nearly $35bn, according to the report. However, that change is overwhelmingly short of what climate groups say is needed to properly develop clean energy and reach net zero.
“The data indicates major failings by financial institutions to help meet global commitments on net-zero emissions by 2050 since it shows shockingly low financial support through loans and bond underwriting for clean energy,” the report noted. “It calls into question pledges from the industry-led Glasgow Financial Alliance for Net Zero (GFANZ), whose commissioned research shows low carbon energy investments need to be at least four times fossil fuels investments by 2030 to reach climate goals.”
Surprisingly, the proportion of lending assets affiliated with clean energy was dramatically higher among non-GFANZ banks than members of the alliance. In 2022, for example, 18% of energy financing from nonmembers was in clean energy, versus only 3% among GFANZ member banks, according to the report.
Additionally, the banks with the highest proportion of lending for clean energy are based in China: Industrial and Commercial Bank of China (24%); Bank of China (10%); and Ping An Insurance Group (33%).
The rates among US banks were significantly lower, with Bank of America, JPMorgan Chase and Citigroup all at 2%, Morgan Stanley at 7%, Wells Fargo at 0% and Goldman Sachs at 3%, according to the report.
In a statement provided by a public relations firm, GFANZ disputed the report’s findings, saying that it does not cover most of the clean energy financing that has been made.
“The report excludes 70% of power generation companies, the bulk of which accounts for most of the world’s wind and solar power,” the group said. “Analysis by the IEA suggests that between 2021 and 2022 around 48% of total energy investment went to low carbon energy supply. That would be impossible if GFANZ members weren’t financing the transition.”
The group said it calls on governments to turn out policies that would further encourage private financing of clean energy.
“This year GFANZ members will detail how they are financing the transition of the energy sector when they publish their interim targets and transition plans,” the group said. “This will allow government, investors and civil society organizations to track progress towards our shared goals.”