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Asset manager net zero commitments to be tested at Standard Chartered AGM

Voting at this year’s Standard Chartered AGM is going to be revealing regarding the depth of asset manager commitments to net zero and ESG.

For the first time since the International Energy Agency’s (IEA) net zero by 2050 pathway was published, investors will have a direct choice between voting for alignment or voting to undermine it.

Several banks have now announced net zero targets, but transition plans vary a lot. In 2021, Standard Chartered published its ‘net zero pathway’, but despite the bank’s claims, it is demonstrably not aligned with net zero, and the bank is increasingly lagging its peers.

Friends Provident Foundation has been engaging the banks on net zero and the financing of fossil fuels and this year co-filed shareholder resolutions at HSBC and Standard Chartered. The former, co-filed with ShareAction, was withdrawn following significant commitments made by HSBC, and positive engagement is ongoing. The Standard Chartered resolution, co-filed with Market Forces, will be proceeding to the AGM vote. Whilst engagement has been positive, insufficient progress has been made.

Our resolution requests that the company align its fossil fuel financing with the IEA’s net zero by 2050 pathway. The resolution, which will be voted on at the AGM in May, calls on the bank to:

  • No longer provide finance to fossil fuel expansion, including new projects and expansion of existing projects, and
  • Adopt short, medium, and long-term targets to reduce fossil fuel exposure consistent with the goal of net zero by 2050.

Standard Chartered’s management has also tabled a resolution at this year’s AGM, asking shareholders to endorse its existing ‘net zero pathway’. This includes a target of 2032 to exit legacy coal financing but gives the company until 2023 to produce a timeline for developing an absolute emissions reduction target for the oil and gas sector. To be clear, this is not a commitment to set a target in 2023 but a timeline to setting a target. It is needless delay of a time critical decision by a globally significant fossil fuel funder. One that increased its funding for companies expanding the fossil fuel industry by 420% between 2016 and 2020.

By comparison, Dutch bank ING has already committed to stop financing new upstream conventional oil and gas projects, and both Barclays and HSBC have produced absolute emissions reduction targets that apply to oil and gas, which do have room for improvement but exist and mark progress.

An even clearer distinction between Standard Chartered and its UK-based peers, is the failure to apply climate policies to capital markets. This is a huge omission, meaning half of Standard Chartered’s 2020 fossil fuel financing is not covered. Barclays’ climate targets cover capital markets and HSBC has announced that it will do the same by the end of 2022.

The Standard Chartered management resolution is not aligned with the IEA’s net zero scenario, it will lead to no change in the bank’s current intensive fossil fuel financing, and means the bank is likely to lag even further behind it peers. It should be clear to investors that this exposes the company and its shareholders to unnecessary and unacceptable transition, legal, regulatory, and reputational risks.

Asset managers that hesitate to vote against company management but increasingly claim to be committed to achieving the goals of the Paris climate agreement and net zero by 2050, will have those commitments tested at the Standard Chartered AGM this year. This will be an opportunity for asset owners like ourselves to judge how authentic many asset managers are and how meaningfully they integrate ESG. Will they vote for our climate science led resolution that is 100% aligned with many asset managers’ stated climate objectives?

Shareholders in Standard Chartered have a very clear and revealing choice to make in May. We encourage them to support our resolution and publicly state their voting intention ahead of the AGM.