New York City Comptroller Brad Lander announced agreements with three major North American banks, including JPMorgan Chase, Citi and RBC, to publicly disclose a new climate reporting metric outlining their ratios of clean energy to fossil fuel finance.
The new agreements follow the filing of shareholder resolutions in January by three of New York City’s pension funds – the New York City Employees’ Retirement System, Teachers’ Retirement System, and Board of Education Retirement System – at JPMorgan, Morgan Stanley, Citi, Goldman Sachs, Bank of America and RBC, to require the banks to provide the new metric, aimed at ensuring that their financing activities align with their net zero commitments.
Basically, the banks will regularly disclose their ratio of clean energy supply financing to fossil fuel extraction financing (energy supply ratio) and their underlying methodology.
Net-zero financing commitments
JPMorgan, Citi and RBC have each made commitments to align their financing activities with net zero by 2050, as well as announcing goals to facilitate $2.5 trillion, $1 trillion and $500 billion of sustainable finance, respectively (by 2030 in the case of JPMorgan and Citi, and by 2025 by RBC).
The Energy Supply Ratio integrates both halves of the equation to combat the climate crisis: phasing out fossil fuels and accelerating investments in climate solutions.
A bank’s energy supply ratio will provide investors with specific decision-useful disclosure where it is currently limited.
The New York City Comptroller’s office said that while banks have robust sustainable financing commitments, a bank’s energy supply ratio will provide investors with specific decision-useful disclosure where it is currently limited.
And these disclosures, which will complement banks’ current financed greenhouse gas emissions disclosures, will meaningfully strengthen their overall climate-related financial disclosures and their role in the energy transition.
Lander issued a statement, saying: “Despite their commitments to decarbonize, US and Canadian banks have financed over $1 trillion of fossil fuel extraction since the Paris Accords. The transition from financing fossil fuels to low-carbon energy is going far too slowly – and thus far, it hasn’t even been possible for shareholders to track. We appreciate JPMorgan, Citi, and RBC agreeing to provide greater transparency so that long-term investors can more effectively measure how well they are or aren’t living up to their commitments.”
Pending proposals
As for other large banks, the pension systems have outstanding shareholder proposals with Bank of America, Goldman Sachs and Morgan Stanley, and the Comptroller said his office will continue engagement with them on this issue.
The Comptroller is the investment adviser to and custodian of assets of the city’s pension funds.
