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Brad Lander, the Comptroller of New York City, has recently unveiled partnerships with three leading banks in North America: JPMorgan Chase, Citi, and RBC. These agreements will see the financial institutions openly share a pioneering climate metric that showcases their funding balance between clean energy and fossil fuel initiatives.
These partnerships emerged following the submission of shareholder resolutions in January by three of New York City's pension funds: the New York City Employees’ Retirement System (NYCERS), Teachers’ Retirement System (TRS), and Board of Education Retirement System (BERS). These resolutions were filed with JPMorgan, Morgan Stanley, Citi, Goldman Sachs, Bank of America, and RBC. The aim was to compel these banks to adopt a new metric that would demonstrate their financing activities are in line with their commitments to achieve net-zero carbon emissions.
JPMorgan, Citi, and RBC have all pledged to adjust their financing practices to achieve a net-zero carbon footprint by 2050. They have also set ambitious targets for facilitating sustainable finance: $2.5 trillion by JPMorgan and Citi by 2030, and $500 billion by RBC by 2025.
Despite these commitments, the Comptroller's office expressed concerns over the persistent high levels of financing for fossil fuels by these banks. A study by Bloomberg NEF highlighted that to meet climate objectives, the ratio of clean energy to fossil fuel financing needs to increase to 4:1 by 2030, a significant jump from the 2022 average of 0.6:1 for North American banks.
Brad Lander criticized the slow pace of transition from fossil fuel financing to low-carbon energy sources, noting the challenge shareholders face in tracking this progress. He pointed out that since the Paris Accords, over $1 trillion has been invested in fossil fuel extraction by banks in the U.S. and Canada.
The agreement reached with the pension funds includes a commitment from the three banks to periodically reveal their ratios of clean to fossil fuel financing, including the methodologies behind these figures. A spokesperson for JPMorgan Chase acknowledged finding common ground with the NYC Comptroller on disclosing a clean energy financing ratio, acknowledging the time and resources required to develop a practical approach.
While JPMorgan, Citi, and RBC have reached an agreement, shareholder resolutions remain active for Bank of America, Goldman Sachs, and Morgan Stanley. The pension funds intend to continue their dialogue with these institutions.
Lander commended JPMorgan, Citi, and RBC for their commitment to transparency, suggesting that such disclosures could set a new standard in the banking industry. He emphasized the importance of this transparency for long-term investors to accurately assess the banks' adherence to their net-zero commitments, especially at a time when both the planet and investment portfolios face significant risks.
As a climate-conscious consumer, it's important to understand that where you choose to store your money can have an outsized impact on your carbon footprint. That's because most of the time, your money is not just sitting idly in your bank account, but it is being used to create loans for projects that can either harm or benefit the planet.
In light of these developments, supporting our partners at Bank.Green becomes even more crucial. Bank.Green is an initiative dedicated to promoting banks that are not just profitable but also not harming the planet. By focusing on banks that prioritize clean over fossil fuel financing, we can encourage a larger shift towards sustainable finance. This approach aligns with the efforts of New York City's pension funds and the recent agreements with major banks, underlining the importance of transparency and responsibility in financing activities. As we witness leading financial institutions taking steps towards sustainability, supporting non-profit organizations like Bank.Green can amplify the impact, encouraging more banks to adopt eco-friendly financing practices and contribute to a greener, more sustainable future.
For further information and to discover the leading green banks near you, please visit: Bank.Green