Barclays and Standard Chartered shareholders reject climate plans

In what has been a busy week for shareholder resolutions and AGMs, climate activists turned their attention to the banking sector, with Barclays and Standard Chartered both facing protests over shareholder votes on climate plans.

For Standard Chartered, almost 12% of shareholders voted for a stronger resolution, based on investor recommendations, on climate finance, with a further 17% rejecting current climate plans to reach net-zero emissions.

Standard Chartered updated its climate goals last year. Standard Chartered first announced plans to reach net-zero portfolio emissions by 2050  and then pledged to mobilise $300bn in finance to low-carbon industries and to projects furthering the low-carbon transition in hard-to-abate sectors by 2030. A new Transition Finance Framework has been published to assist with the latter.

The pledge came with a commitment to reduce absolute financed emissions in the thermal coal sector by 85% by 2030 and pledges to reduce carbon intensity by 63% for power, 33% for steel and mining and 30% for oil and gas within the same timeframe.

Also on coal, there are pledges to stop financing clients who are expanding existing coal-fired power plants or building new facilities. From 2030 onwards, services will only be provided to clients who draw 5% or less of their revenue from thermal coal.

However, there are a number of caveats. Standard Chartered admitted that the net-zero target, at present, excludes more than half of the markets in which it has a presence (33 out of 59). It has committed to include these markets by the first quarter of 2024, but many of its competitors have already drawn up plans for all markets.

Investors and activists including ShareAction and Market Forces believe that the bank should align with the International Energy Agency (IEA)’s net-zero pathway, which states that no new investments in coal mines, coal plants, or oil and gas fields can be made.

Market Forces research states that Standard Chartered-funded expansionary fossil fuel projects made last year alone would emit 2.3 billion tonnes of carbon over their lifetimes.

Market Forces’ UK campaign lead Adam McGibbon said: “Standard Chartered’s institutional investors have some serious questions to answer about their commitment to climate action. The bank’s climate policies have failed to prevent financing for some of the world’s biggest polluters, and shareholders are allowing themselves to be misled by the bank’s claims to ‘align’ with the IEA’s Net Zero by 2050 scenario.

“Today’s vote reveals significant concern about the bank’s climate plans – and management ignores this at its peril.”

Barclays

Barclays has this week revealed that almost 20% of its shareholders rejected its current climate strategy.

The bank published an updated climate strategy as it sent out the notice of the AGM in March. Barclays signalled its support for net-zero by 2050 back in 2020, but has been slow to provide detailed information on delivering this ambition, much to the frustration of sustainability-minded investors and environmental campaign groups.

Detailed in the new climate strategy are commitments to end financing for thermal coal mining and power plants by 2030 in OECD nations and by 2035 elsewhere. There is a notable exception to this rule for coal power plants in the US.

There are no new commitments to limit or end financing for oil and gas companies – including any commitments to limit or end financing for specific activities like oil sands. The strategy acknowledges that most oil and gas majors “are not yet on a 1.5C-aligned pathway” but argues that engagement would be better than divestment, stating that “it would be impracticable for Barclays to try to impose restrictions on financing specific activities”.

In total, 19.9% opposed the strategy, with a further 11% also opposing a new pay policy. The meeting was disrupted by climate activist groups, including Extinction Rebellion, with people gluing themselves to chairs and setting off alarms at the Manchester Central Convention Complex.

Barclays has notably been dubbed Europe’s largest fossil fuel banker in terms of investment by some groups, including Market Forces. Bloomberg has estimated that, since the Paris Agreement was ratified in 2015, the bank has arranged $95.7bn of bonds and loans for oil, gas, coal and nuclear power.

Climate activists and investors have said that the bank has, historically, not moved fast enough on climate issues, calling for more detail on how it will reach its future ambitions without greenwashing.

Exactly 12 months ago, Barclays’ shareholders rejected a proposal from activists that would require the bank to reduce fossil fuel finance on climate grounds.

Shareholder pressure

There has been a flurry of shareholder resolutions based on climate grounds in recent days.

Away from banking, Boeing is being pressed by 91% of its shareholders, who collectively manage more than $43.7bn in assets, to outline a credible pathway to net-zero that covers indirect (Scope 3) emissions.

A vote was held on a ‘Say on Climate’ resolution, filed at Boeing by As You Sow, on Tuesday (3 May). The resolution calls on Boeing to outline how its overarching net-zero target and interim commitments to cut emissions are aligned with a 1.5C temperature pathway.

Boeing has publicly stated that it supports the global commercial aviation sector’s overarching vision to reach net-zero by 2050. However, investors are pushing for more specific information on how the company intends to get there.

ExxonMobil and BP have also been the focal point of activist interventions. Late last year, Exxon announced a new plan to reduce absolute emissions by 20% by 2030 and kick-started a $15bn investment plan through to 2027. But the firm will likely continue to face intense scrutiny from the green economy.

Exxon described its new emissions goals as “more aggressive” but they are unlikely to impress green groups or sustainability-minded investors. Back in May, Exxon shareholders appointed two independent director candidates from climate action group Engine No. 1 to the board.