This year’s Annual General Meetings of the six major US banks have revealed a concerning disparity between the financial risks associated with climate change and the banks' current investment decisions.
Welcome back to the Climate Nexus finance newsletter – a regular update that looks at the big stories and players at the intersection of climate change, finance, regulation, and energy, with tips for the week ahead.
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Bad news at the big banks
This year’s Annual General Meetings of the six major US banks have revealed a concerning disparity between the financial risks associated with climate change and the banks' current investment decisions. Despite mounting pressure to reduce their financing of fossil fuels, shareholder resolutions advocating for such reductions received minimal support, with votes at Citigroup, Bank of America, and Morgan Stanley receiving 10%, 7%, and 4.8%, respectively. Nevertheless, there is a glimmer of hope in the form of notable minority support for resolutions demanding comprehensive climate transition plans. These proposals seek to align the banks' financing activities with their 2030 emissions targets and received 31% support at Wells Fargo, 30% at Goldman Sachs, 29% at Bank of America, and ~35% at JPMorgan, including backing from some of the most powerful asset managers.
New docs show fossil funding for ESG attacks
New documents obtained by InfluenceMap show that fossil fuel interests are coordinating the blowback to sustainable investing. This comes after a week in which a new “study”—from a group founded by former ALEC economists—claimed ESG actually costs shareholders (it doesn’t). Eighteen Republican State Treasurers worked with the State Financial Officers Foundation to send a letter to BlackRock, questioning its focus on ESG. New federal legislation has also been proposed to ban the same asset manager, which the sponsor disparagingly refers to as a 'far-left, multinational hedge fund,' from investing public funds in ESG. A group of climate-denying GOP senators also urged the Federal Reserve to ignore financial risks related to climate change.
Texas risks it all with insurance gamble
Two new pieces of legislation that would kneecap the insurance industry are being voted on in Texas. SB 833 prevents insurance companies operating in Texas from being able to use ESG risk metrics in their actuarial work. This would undermine risk assessment and insurance company business models. The legislation passed out of the full Senate and the House Committee on Insurance and now awaits a full House vote. A related piece of legislation, SB 1060, also passed the Senate and received unanimous approval from the House Committee on Insurance. This bill would ban shareholders of publicly traded insurance companies based in Texas from proposing ESG-themed resolutions for proxy votes at annual meetings. Texas Governor Abbott has already indicated he supports cracking down on the insurance industry’s use of ESG metrics in a recent letter written to President Biden. The insurance sector has become the next frontier for attacks on ESG. As goes Texas, so go other red states.
Dumb debt ceiling deliberations
As debt ceiling negotiations reach their stupid conclusion, it’s worth paying attention to the implications for climate change. Republican bids include nixing a swath of clean energy tax credits under the IRA. Lesser known impacts could include furloughing thousands of firefighters ahead of a climate-change-supercharged wildfire season. Oh, and default would be pretty bad for the whole economy.
G7 won’t let go of fossil fuels
Concrete climate commitments were lacking at the G7 in Hiroshima this weekend. Nations expressed support for reforming the World Bank and mobilizing $600 billion through the Partnership for Global Infrastructure Investment, but Japan resisted coal phase-out language while Germany sought to expand public investment in methane gas. The US may be working to scale up domestic clean energy, but it continues to invest in fossil fuels at home and abroad. With the G7’s economic clout being “central to climate action,” many environmentalgroups consider this year’s meeting a backpedal on climate.
On our radar
Phenomenal World: A New Foreign Policy - we can’t recommend this one enough. The best starting point for understanding how US industrial policy impacts trade and foreign policy. Are they even different things anymore?