By Rachel Sherrington, a freelance investigative researcher and reporter based in London. She is the former Lead Researcher and Reporter at DeSmog, where she oversaw investigations into corporate greenwashing, banks’ financing of fossil fuels, and agribusiness lobbying against the EU’s Farm to Fork. Her work has been covered by outlets including The Guardian, Vice News, The Financial Times and The Hill.. Originally published at DeSmog.
Four in five bank directors at the six largest banks in the U.S. have ties to polluting companies and organizations, including major fossil fuel companies, according to a new DeSmog analysis.
The research raises fresh concerns about the extent of anti-environmental influence inside some of the nation’s most powerful boardrooms at a time when campaigners are pushing the banks to enact stronger environmental policies at their annual shareholder meetings.
It reveals that 82 percent of board members at these six banks currently hold or have held positions with climate-conflicted organizations. This includes oil and gas firms, investment companies that finance polluting sectors, and trade associations known to lobby against climate action.
Nearly one in five directors (19 percent) have current or past experience working in the fossil fuel industry.
The findings come as a March report from the head of the world’s leading climate science body, the Intergovernmental Panel on Climate Change (IPCC), said that big changes to finance were essential to avoiding catastrophic climate impacts.
Despite the increasing global attention paid to the climate crisis, the proportion of board members at these banks with climate conflicts has not changed in two years. The proportion of directors at the six banks linked to the fossil fuel industry remained the same as in 2021 – despite a number of changes at the top of these companies – as did the number of directors linked to other high-carbon industries.
Nearly one third of the board members at Bank of America, Citi, Goldman Sachs, JP Morgan Chase, Morgan Stanley, and Wells Fargo have current or past connections with companies identified by the Climate Action 100+ (CA100+) initiative as among the globe’s top climate polluters.
Companies active in generating energy from coal, the world’s most polluting fuel source, have former or current employees inside boardrooms at Bank of America, Morgan Stanley, and Wells Fargo. Directors on four of the boards of the six biggest banks in the U.S. currently hold leadership positions in the fossil fuel industry through other board memberships.
All six banks have pledged to reach net zero across their portfolios. However, according to a recent report by Rainforest Action Network, they have collectively provided $1.7 trillion in fossil fuel financing since the Paris Agreement was signed in 2015 and $413 billion since 2021 – the year in which the International Energy Agency called for no new financing of oil, gas, and coal projects. This financing involves both direct lending and underwriting debt and equity issuances.
Bank of America and Wells Fargo declined to provide a response on the record. All the remaining banks and named directors did not respond to our requests for comment.
Banks and other high-emitting companies have been facing a record number of climate demands at their recent annual general meetings (AGMs), where investors have the opportunity to vote on strategic decisions affecting their firms.
At the shareholder meetings of Wells Fargo, Bank of America, Citi, and Goldman Sachs on April 25 and 26, climate resolutions received mixed support from investors. Those calling for more disclosure of climate plans drew support, while those calling for an outright end to new fossil fuel financing proved less popular.
Voting on board member appointments has also been taking place, with the four banks seeing all their chosen directors either elected for the first time or re-elected. The remaining two shareholder meetings will be held by Morgan Stanley on May 19, and JP Morgan on May 22. Campaigners are urging shareholders at these meetings – and in the future – to consider voting against individuals who may be holding up climate action.
Jessye Waxman, Senior Campaign Representative in the Sierra Club’s Fossil-Free Finance campaign, said: “Given the troubling connections of many board members, it’s no surprise the U.S. banking majors are so far behind on their climate goals – including by continuing unrestricted financing for fossil fuel clients that refuse to transition, and by failing to finance climate solutions at rates commensurate with their fair share.
“Prudent shareholders would be wise to consider how board composition may negatively impact a bank’s ability to deliver on its goals – and vote their proxies accordingly.”
Fossil Fuel Links
The boards of the six biggest U.S. banks have extensive ties to the fossil fuel sector, the industry most responsible for rising greenhouse gas emissions, DeSmog research shows.
Nearly one in five directors have current or past experience working in the fossil fuel industry, through roles at oil, gas, and polluting utility companies.
While some directors linked to the fossil fuel industry – such as former Mexican President Ernesto Zedillo, who was previously an advisor to European oil giant BP, and a board member at Citi – have left the banks since DeSmog’s last analysis in 2021, others with fossil fuel affiliations have replaced them.
This includes Goldman Sachs director Jessica Uhl, who is the former Chief Financial Officer of the European oil giant Shell where she worked for nearly two decades until leaving in March 2022.
Other directors with long-held ties to the fossil fuel industry include Theodore F. Craver, a current director at CA100+ utility company Duke Energy. Craver has held a number of prominent roles in the U.S. energy sector over a career spanning more than 20 years.
The bank with the highest share of directors tied to the fossil fuel industry is Bank of America, where a third of the board (four directors) have experience working in the fossil fuel sector through roles at oil, gas, and fossil fuel-reliant utility companies. A fifth of the board members at Wells Fargo, Morgan Stanley, and Goldman Sachs have past or current experience in the sector.
Caleb Schwartz, Research and Policy Analyst at Rainforest Action Network and one of the authors of a new report into fossil fuel financing, said it was “both shocking and not surprising to see the amount of overlap between the boards of the fossil fuel and banking industries.
“It’s shocking because these banks have all committed to climate action and to their so-called net zero plans to decarbonize, and there’s a lot of PR and public-facing rhetoric about climate action,” Schwartz said.
“But it’s not necessarily surprising because the data shows that these banks are not aligned with the climate targets that they should be and they’re not taking necessary action and they’re actually propping up the expansion of the fossil fuel industry.”
While voting on directors and climate resolutions has now finished for four of the banks, climate resolutions will be on the table at the shareholder meetings of JP Morgan and Morgan Stanley, which will take place on May 16 and 19.
Support for climate resolutions in finance and big business has been on the rise. Although only a small number of these resolutions usually succeed, there have been a number of successful, watershed investor revolts over climate change in recent years.
This includes a revolt two years ago by shareholders at oil giant ExxonMobil, which led to the unseating and replacement of three Exxon directors over climate leadership concerns. Efforts to remove directors have also been attempted at oil companies Marathon and ConocoPhillips in recent years.
‘Very Bad Business’
Experts say that a reliance on fossil fuels is also a poor financial strategy – one that is at risk of being exacerbated by the conflicts of interest displayed by these board members.
The prevalence of directors with experience in the fossil fuel industry presents a risk, according to Tom Sanzillo, director of Financial Analysis at the Institute for Energy Economics and Financial Analysis, and former Deputy Comptroller for the State of New York.
This is due in particular to the waning profits of the fossil fuel industry and the increased volatility of fossil fuel investments, he said.
“I see it fundamentally as really bad business to have a heavy concentration of an industry that – except for the period of the Ukrainian oil price increase – has lagged the market for a decade and lost share value over the long-term considerably,” Sanzillo said.
“Since January 1, they’ve been at, or near, last place in the stock market. Their private equity positions have deteriorated. They lack any kind of financial growth rationale. Why would you want a heavy concentration of people from that industry on the board of a bank? From a financial policy point of view it’s unsound,” he added. “Where the economy is going really requires a rethink of boards. And that rethink needs to look at what kind of board members do you need to go forward in an economy that’s changing.”
DeSmog’s analysis also looked at the makeup of the board committees advising directors on financial risks.
The research found that 69 percent of the board members on the risk committees of these banks have ties to polluting companies and industries, including 14 percent who have current or past links to the fossil fuel sector.
For example, on the Goldman Sachs risk committee, former Shell CFO Uhl is joined by Adebayo Ogunlesi, a current director of Kosmos Energy, a Texan deepwater oil exploration company.
Analysts are agreed that the transition away from fossil fuels – driven by the urgent need to slow global heating and the plummeting cost of renewables – poses large financial risks to banks and to the wider economy if not managed carefully.
Under this scenario, banks are exposed to ‘stranded assets’, whereby oil, gas, and coal assets could quickly lose their value due to new regulations put in place by governments.
Sanzillo told DeSmog that the prevalence of directors with affiliations to fossil fuels could “increase the willingness of the banks to absorb more risk.”
He added that the members of these risk committees “are in fact a material risk to the banks’ successful investment strategies.”
Waxman affirmed this point, saying: “failing to phase out clients with disproportionately high climate-related risks subjects the banks to heightened regulatory scrutiny and increased capital requirements, risk of litigation and heightened credit risk, and reputational damage on an order significant enough to confer material financial risk.”
High-Carbon Connections
DeSmog’s analysis included financial and investment institutions that finance the fossil fuel industry, firms operating in other high-carbon sectors such as road transport and heavy industry, and trade groups that have lobbied against climate action.
Nearly one third (32 percent) of board members at the six banks have held roles, often senior, at other banks that are among the largest financial supporters of the fossil fuel industry.
For example, Steven D. Black – now a board member of Wells Fargo – is former Vice Chair of JP Morgan, the world’s largest bank and the largest funder of fossil fuels globally, which has given $434 billion to oil, gas, and coal companies since the Paris Agreement was signed.
Nearly one third of the directors have links to Climate Action 100+ companies, including major U.S. polluters such as General Electric and General Motors. The research also recorded the links between directors and companies in other high–carbon and fossil fuel reliant sectors such as mining, shipping, and aviation.
Nearly a quarter of the directors at the banks are linked to trade associations and think tanks that have campaigned against climate action or are connected to the fossil fuel industry. This includes nearly a dozen directors who were previously or are currently members of the U.S. Business Roundtable – a group of senior business leaders that has pledged to support climate action but which recently opposed key measures in President Joe Biden’s Inflation Reduction Act.
The ties of bank directors to polluting industries are concerning, said Richard Brookes, director of Climate Finance at the environmental advocacy group Stand.earth, as are their links to trade groups.
“We’re in a crisis and we need to use all the tools at our disposal to be accelerating towards a clean energy and renewable-based economy and every time a trade association lobbies against an important piece of legislation or policy, like the Inflation Reduction Act, they’re effectively putting their foot on the brake and slowing us down when we need to be moving full speed ahead,” he said.
“The directors that are involved in groups that are lobbying against climate regulation and policy should be questioned. There needs to be alignment [on climate] across the board and it is the responsibility of those banks to make sure that they’re doing everything that they can.”
A seeming lack of impetus to address climate conflicts of interest within these banks echoes their lack of climate action more broadly, Schwartz said. “I would say that it parallels the relative inaction that banks have taken on their climate financing commitments since 2021. We need to see a lot more and a lot quicker.”