The dean of Wall Street CEOs is green. JPMorgan Chase today reached a settlement with three New York City pension funds with investments in the bank worth $478 million to disclose the relationship between its clean energy and fossil fuel financing. According to the New York funds, the metric will give investors a more complete view of how the bank is progressing toward its net-zero emissions goals and whether it is increasing its clean energy financing activities over time.
JPMorgan’s agreement with the three New York funds, which manage a total of 193 billion dollars in assets, will lead to the withdrawal of the shareholders’ proposal, imposed by them against six large banks. This makes JPMorgan the first of these banks to strike a deal with investors. The others – Bank of America, Citigroup, Goldman Sachs, Morgan Stanley and Royal Bank of Canada – still have pending proposals and the New York Comptroller’s office has engaged with them. In January pension funds announced they were launching a campaign to push banks to provide more data on their climate transition commitments.
Research from Bloomberg New Energy Finance found that for the average global temperature rise to remain below 1.5 degrees Celsius, which is optimal, the ratio of investment in low-carbon energy to fossil fuels must reach a minimum of 4 to 1 by 2030. There, the ratio must increase to 6 to 10 in the next decade, and to 10 to 1 thereafter. In 2021, Bloomberg research found that for every dollar spent supporting fossil fuels, 0.8 supported low-carbon energy. The ratio estimated by JP Morgan was 0.7.
A JPMorgan spokesperson said it will take time to figure out how to best disclose the metrics investors want.
“We found common ground with the NYC Comptroller on the disclosure of a clean energy financing report with the understanding that it will take some time and resources to develop a useful decision-making approach,” a spokesperson said in a statement to Fortune. “We will engage with New York and our shareholders to provide the market with greater clarity and transparency on our operations and how to actually finance the transition.”
In 2021, the bank announced a target of $1 trillion to finance initiatives to help the transition to a low-carbon economy. However, the funds highlighted in their proposal that JPMorgan offers more fossil fuel financing than other banks, committing $434 billion since 2016, despite a pledge to reach net-zero emissions by 2050, the funds said. New York.
The move comes just weeks after JP Morgan Asset Management and State Street were sharply criticized for abandoning Climate Action 100+, a coalition of investors focused on working together to target companies that are also the biggest emitters of greenhouse gases. Since then, Pacific Investment Management Company (Pimco) has also announced that it will leave the group, bringing total assets under management to $19 trillion. (BlackRock moved its stake in C100+ to BlackRock International.)
The asset management firms underlined their independence in withdrawing from the C100+, noting that the group was previously focused on agitating for clearer disclosure and was not seeking specific action. This strategy is set to change this year with the second phase strategy. It also coincides with a movement toward anti-ESG proposals and rhetoric that has led conservative groups and politicians to criticize financial services companies for catering to “wokeness” at the expense of financial returns.
A spokesperson for Climate Action said this Fortune that antitrust laws are not intended to prevent investors or companies from working together on goals deemed non-anticompetitive “that each has independently decided is in their best interests.”
The group cited an analysis by the Columbia Center on Sustainable Investment that found that antitrust law is having a chilling effect on “necessary private sector actions to address climate and other sustainability challenges.”
THE Wall Street Journal reported this week that BlackRock has dropped the term “ESG” from its public statements and that CEO Larry Fink no longer uses it in his annual letters. Instead, “transition investing” is the new way to talk about ESG magazine reported.
However, no matter what words companies use to discuss it, investors, particularly pension funds, remain focused on the risk of climate change and are committed to companies meeting their commitment to net zero emissions. In 2023, a record number of 643 environmentally or socially related shareholder proposals were filed at public companies, a record high that is expected to persist into 2024, according to a report from investor advisory firm Institutional Shareholder Services.
Climate change issues are expected to generate the greatest number of shareholder proposals to companies, the ISS report finds, and some investors are calling on financial services firms to report any misalignment between customers’ greenhouse gas emissions and their 2030 net-zero goals.