As climate-related events hit home with increasing frequency and destruction, the Paris Agreement’s goal of net-zero emissions by 2050 has begun to resonate throughout the financial system. From climate risk reporting to net-zero commitments, the low carbon economy is gaining traction and speed.

Banks are a crucial part of this transition. The largest banks are now choosing whether to incentivize and drive emissions reductions across the full range of their financing activities – or continue funding high carbon, status quo activities while making climate commitments on the margins.

As You Sow and a range of co-filers have continued to engage the largest U.S. banks on climate this year, filing resolutions at Wells Fargo, JPMorgan Chase, Bank of America, Citibank, and Goldman Sachs, seeking confirmation as to whether each bank intends to adopt the three basic metrics on measuring, disclosing, and reducing its financed emissions in alignment with the Paris Agreement’s 1.5°C goal. Morgan Stanley, in September 2020, was the first major U.S. bank to commit to all three components. JPMorgan Chase followed in 2020 with a commitment to align its financed emissions with the Paris Agreement and to measure its financed emissions for three high carbon sectors, lacking only a clear commitment to publicly disclose its financed emissions.

This year, Citigroup joined Bank of America, in setting long-term targets to reduce its financed emissions in line with the Paris Agreement’s net-zero goal. These announcements resulted in withdrawal of shareholder resolutions and confirmed a new standard for U.S. banks in taking responsibility for reducing their contributions to climate change. JPMorgan also agreed, in response to a shareholder proposal, to disclose its financed emissions, assumptions, and methodologies; to report annually on success in portfolio decarbonization; and to announce a timeline for adding additional sectors to its assessment, disclosure, and reduction commitments.

While shareholders are engaging with Goldman Sachs and anticipate a similar commitment, they are increasingly concerned that Wells Fargo is lagging its peers. Wells Fargo has undertaken Task Force on Climate-related Financial Disclosures (TCFD) reporting to measure its own climate risk, as the others have, but it stopped there. Now, it is fighting a proposal asking it to measure, disclose, and reduce its financed emissions in line with the Paris Agreement’s net-zero goals. Instead of allowing the proposal on its proxy to prompt discussion and analysis, it wants to prevent its inclusion in the proxy statement through a challenge filed at the SEC. This is not a productive response. No matter the outcome of this challenge, shareholders will continue to ask Wells Fargo to accept responsibility for the climate-endangering emissions it is financing.

As surely as individual companies are responsible for the greenhouse gas emissions their activities and products produce, global banks are responsible for their actions in funding and facilitating them. Only when each bank takes responsibility for its climate impact by setting greenhouse gas emission reduction goals on its full range of financing activities, and measuring and disclosing progress in reducing them, can global progress on climate be made.