Pensions, Banks, and Fossil Fuels
A new report from Stand.earth and the Climate Safe Pensions Network reveals just 14 large U.S. public pension funds have almost $61 billion in assets invested in or with 60 of the largest commercial and investment banks.
The report, “Pensions, Banks, and Fossil Fuels: How Our Money is Fueling the Climate Crisis and How to Stop it,’’ maps out the money pipeline between pension funds, and the big 60 banks they work with, that provided over $4.5 trillion in loans and underwriting to fossil fuel companies over the six years since the adoption of the UN Paris Agreement.
Ongoing financial support for fossil fuel companies comes from many sources, but a lot comes from the large, mainstream commercial banks that are considered respectable leaders of our global economy. And public pension funds, including those same ones that have promised to divest from fossil fuels, are actually contributing to this problem with their continued investments in and with banks directly financing fossil fuel companies.
Public pension funds, meant to be among the longest-term investors, could be powerful players in the fight to make banks clean up their act. They are major investors in and customers of these banks. The California Public Employees’ Retirement System, for example, has over $1.16 billion invested in or with JP Morgan Chase, the largest fossil fuel financier on the planet, much of it in direct ownership shares of the bank. These pension funds have a major voice as shareholders and, like all major institutional investors, they have the ability to drive overall market trends through their decisions.
If public pension funds are serious about their commitment to a rapid and just transition to a clean energy economy, they have to use their clout to change bank behavior.
There are immediate opportunities for them to do so in 2022.
At minimum, public pension funds should:
- Vote in favor of climate-related shareholder resolutions at banks at upcoming annual shareholder meetings.
- Take a public position on their shareholder voting intentions.
- Vote against specific recommended directors at key banks.
- Push their asset managers to vote in favor of climate resolutions at banks.
- Engage banks to make concrete commitments to change their financing practices by 2030.
- Commit to shift funds to cleaner banks.
These measures, all of which are within pension funds’ power and none of which jeopardize their returns or relationships, would open up a critical new pathway to revitalizing our financial system. Major change is needed to put us on a pathway to our collective climate goals. Public pension funds and banks can and must do more to get us there.