Wall Street Giants Plan More Active Role in Climate Fight

by Amy Harder (Axios) Four of America’s biggest banks are backing a new nonprofit initiative to leverage the financial sector toward achieving climate-change goals. Driving the news: The Rocky Mountain Institute (RMI) is launching a center focused on climate that will be supported by Wells Fargo, Goldman Sachs, Bank of America and JPMorgan Chase.

Why it matters: Banks have increased their rhetoric on the threat of climate change recently, but they still finance billions of dollars for the oil, natural gas and coal industries, which account for 80% of the world’s energy consumption. This initiative is the latest sign of how the financial sector is (slowly and unevenly) embracing a transition to cleaner technologies.

How it works: The Center for Climate Aligned Finance will, among other things, try to help fossil-fuel companies and other carbon-intensive sectors aggressively cut emissions with the input of banks and shareholders.

But, but, but: Details were hard to come by, including how much money the banks were putting toward the effort. During a press call Wednesday, no bank officials said explicitly that they would change their lending and investment practices based on the initiative.

Excerpt from Politico's Morning Energy: MORGAN STANLEY TO DISCLOSE CLIMATE CONTRIBUTIONS: Wall Street giant Morgan Stanley is announcing this morning it will publicly disclose how much its loans and investments contribute to climate change, Zack reports.

The bank is joining the Partnership for Carbon Accounting Financials, a global body with 67 financial company members managing $5.3 trillion of assets and that counts the greenhouse gas emissions from projects and investments that are financed by asset managers, banks and other institutions. Morgan Stanley will sit on the group's steering committee to help deliver a final methodology for financial institutions to follow this fall.

"This is a journey, and I think that this is an incredibly important piece of it, because as we all know it's harder to make people respond to something when there's no data, it's hard to have data when you don't have measurement," Audrey Choi, chief sustainability officer for Morgan Stanley and CEO of its Institute for Sustainable Investing, told POLITICO. "This is an important step towards getting more clarity."

The move comes as financial regulators in many countries are considering whether to require greater disclosure from companies about the risks they face from climate change — and as a growing number of shareholders and investors worry about their exposure to fossil fuels that could suffer from future government policies to rein in greenhouse gas emissions.

Since 2016, 35 banks have poured $2.7 trillion into fossil fuel projects, according to environmental group Rainforest Action Network — and Morgan Stanley has accounted for nearly $92 billion of that total. READ MORE

Excerpt from Politico's Morning Energy: TRUMP TO PROBE FROZEN ANWR FINANCING: The acting head of the Comptroller of the Currency said the Trump administration would give a "serious look" at recent decisions by banks to avoid financing oil and gas exploration in ANWR, according to a letter obtained by Pro's Anthony Adragna. Acting Comptroller Brian Brooks wrote to Sen. Dan Sullivan that he shares the concerns of the Alaska Republican and several of his GOP colleagues that the decisions by Morgan Stanley, Wells Fargo, Goldman Sachs, JPMorgan Chase and Citigroup represent a form of discrimination by the financial sector, Anthony reports . “Given the industry’s importance and ubiquity in our daily lives, I am skeptical of claims that the sector poses a ‘reputational risk’ to the banks that serve it,” Brooks wrote, adding that federal law requires "fair access" to financial institutions.

But ANWR has been a hot-button political issue for decades because of the sensitive ecosystem it supports, giving it a higher public profile than many other fossil fuel plays. The amount of oil and gas it holds is also debated. A growing number of climate and environmental activists, including some congressional Democrats, have urged the financial sector to more seriously consider reputational and systemic risks from backing fossil fuel projects. Deutsche Bank on Monday became the latest to refuse financing for Arctic drilling. READ MORE

SHOWDOWN OVER SUSTAINABLE INVESTING RULE: House Democrats, investors and state pension fund operators are pushing back against a Trump administration proposal guiding how pension fund managers can pursue sustainable investments, saying it could expose retirees to shrinking nest eggs as climate change worsens, Pro’s Zack Colman reports . The activity comes as the comment period closes today for a Labor Department proposal that would put limits on an investment category that lacks clear parameters.

Labor’s proposal would forbid pension fund managers to allow environmental, social and governance factors, a class known collectively as ESG, to tip the balance in deciding how to invest employee retirement funds. Labor Secretary Eugene Scalia is skeptical that some fund managers are using ESG as a means of virtue signaling that threatens investor returns. Opponents of the proposal contend it narrowly defines risks, restricting fund managers from weighing how climate change, human rights and other issues negatively affect portfolio performance.

Calls to assess the financial effect of physical climate risks, as well as those from transitioning off of fossil fuels, are growing in the U.S . A group of 21 House Democrats called Labor’s proposal a "solution in search of a problem," given that ESG funds have generally fared no worse and often better than competing funds and stock indices. "The proposed rule upsets the balance that decades of guidance sought to strike and needlessly erects barriers for ESG investing that do not exist for other assets in defined contribution (DC) plans," the lawmakers wrote to Scalia in a letter that was shared with POLITICO.

BANK OF AMERICA COMMITS TO TALLYING EMISSIONS: Bank of America will disclose all the greenhouse gas emissions financed by its loans and investments by joining the Partnership for Carbon Accounting Financials, a group working on a common reporting framework for tracking those emissions. The Charlotte, N.C.-based bank becomes the second major U.S. bank to join, following Morgan Stanley’s addition last week, which was first reported by POLITICO . PCAF member institutions now total nearly 70 banks and investors controlling $9 trillion in assets. “As a global financial institution, and as an industry, we have a critical role to play in accelerating the transition to a low-carbon, more sustainable economy,” Anne Finucane, vice chairman at Bank of America, said in a statement. READ MORE