NYC Comptroller: Major Banks Neglect Their Own Net Zero Goals

Three of the city’s pension funds filed shareholder proposals seeking greater fossil-fuel transparency at six of the largest banks in North America.

New York City Comptroller Brad Lander and three of the city’s pension funds have filed shareholder proposals asking banks to fully report their ratios of clean energy to fossil fuel finance and “live up to their own rhetoric on achieving net zero implementation plans.”

The proposals were filed by Lander and trustees of the New York City Employees’ Retirement System, the Teachers’ Retirement System and the Board of Education Retirement System at JPMorgan Chase and Morgan Stanley, while NYCERS and TRS also filed proposals at Bank of America, Citigroup, Goldman Sachs, and Royal Bank of Canada.

The proposals are asking the banks to disclose energy-supply financing ratios and to report regularly and transparently on whether they are hitting their targets. Lander and the pension funds said energy-supply finance ratios are “an essential metric” to measure a bank’s equity and debt financing of companies and projects.

The resolutions also call for each bank to:

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Set timebound energy-supply financing ratio targets aligned with their net zero commitments.
Consult Bloomberg NEF reports when setting ratio targets and defining “low-carbon” and “fossil-fuel” financing.
Set standardized industrywide methodologies.
Include lending in its ratio – if it is “methodologically sound.”

“Despite all their talk, the big banks have made little progress in the energy finance transition over the past couple of years,” Lander said in a release. “As long-term investors exposed to climate risk, we can’t just take their word for it. Reporting transparently on their ratios of clean energy to fossil fuel finance is key to seeing whether or not they are living up to their net-zero commitments. Right now, they aren’t.”

As of December, the three New York City retirement systems owned 2.81 million shares combined in JPMorgan Chase worth $477.51 million; 7.17 million shares in Bank of America, $241.31 million; 2.32 million shares in Citigroup, $119.46 million; 385,630 shares in Goldman Sachs, $148.76 million; 1.36 million shares in Morgan Stanley, $126.81 million; and 216,120 shares in Royal Bank of Canada, $21.96 million.

“North American banks appear to believe that they can just scale up financing of clean energy, without phasing out fossil fuel finance,” Lander said. “But press releases about great new projects won’t protect our portfolios or our planet if overall emissions keep rising.”

RBC said in a statement to CIO that it is “committed to achieving net-zero in our lending portfolio by 2050,” and that it is working with its clients “to support their plans to bring their emissions down, not just to get them off our books.” The bank added that “we believe in open, transparent dialogue and appreciate the opportunity to engage with shareholders on a shared desire to help ensure a successful transition to net-zero.”

JPMorgan Chase declined to comment, while Morgan Stanley, Bank of America, Citigroup, Goldman Sachs and did not immediately respond to a request for comment.

NYC Pension Funds Call for Greenhouse Gas Disclosure From 4 Major Banks

NYC Pension Funds Sued for Divesting $4 Billion in Fossil-Fuel Assets

Tags: Bank of America, BERS, Board of Education Retirement System, Brad Lander, Citigroup, Goldman Sachs, JPMorgan Chase & Co., Morgan Stanley, New York City Comptroller, New York City Employees' Retirement System (NYCERS), Royal Bank of Canada, Teachers Retirement System, TRS

The Magnificent Seven is slightly less magnificent lately, as other stocks gain value in the current bull run.

Since the Oct. 27, 2023, market low, names other than the mega-cap tech Seven have been on a tear, too, Truist Advisory Services pointed out in a research note.

The S&P 500 is up 22% since the low. That is just below its all-time high (the index lost 0.6% Tuesday as Palo Alto Networks Inc. delivered a weak revenue forecast for the year) and now is partly powered by plenty of less-celebrated stocks than the Seven.

The overall result is “a broad-based rally,” wrote Keith Lerner, Truist’s co-CIO and chief market strategist, and the report’s author. “The market rally that we have seen since October is broader than many investors give it credit for.”

The tech sector is ahead 28.8% during the period. Wall Street braced Wednesday for chipmaker Nvidia Corp.’s financial results, due after the market close, with expectations high for blowout revenue.

The financial sector is up 26.2%, near its all-time high, and industrials have jumped 22.9%, Lerner observes. Financials are benefiting from a resilient economy, he explains. Plus, “financials are not just banks.”

He names credit card companies, such as Visa Inc., and Berkshire Hathaway Inc., the segment’s biggest member, as propellants for the category. One indication of the possible gains in the sector is Capital One Financial Corp.’s $35 billion bid to acquire Discover Financial Services, which would create the nation’s largest card issuer.

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The industrial sector includes air carriers like Delta Air Lines Inc. and freight colossus FedEx Corp. The reasons for industrials’ increase, says Lerner, are “large fiscal stimulus that is still hitting, onshoring, defense spending and inventories rebounding from depressed levels.”

Formerly battered small-cap and mid-cap stocks also have returned more than 20% since October, he adds. Meanwhile, the S&P 500 Equal Weight Index is ahead just under 20% for the period, further underscoring the non-Mag-Seven’s surge.

An example of a winner outside the Seven is drugmaker Eli Lilly and Co., up 34.6% since the October low, beating the S&P 500. Lilly has a large roster of best-selling drugs, including diabetes treatment Humalog and anti-depressant medication Prozac.

Some on Wall Street suggest that Lilly should replace Tesla Inc., in the Magnificent Seven. The electric vehicle maker, the smallest member of the Seven by market capitalization, is valued less than Lilly ($717 billion versus $617 billion). Further, unlike the pharma giant, Tesla’s stock is below the October market nadir, losing 6.7% since then.

In Lerner’s view, “Although we remain overweight tech, a cooling period would not be a surprise after the runup.”