May 14, 2004
Shareowner Resolution Withdrawn as JP Morgan Chase Addresses Environmental Risks
by William Baue
A group of socially responsible investment advocates withdrew a shareowner resolution from JP
Morgan Chase when the company established an office of environmental affairs.
High votes on shareowner resolutions do not always convince companies to implement requested
changes. However, the withdrawal of a shareowner resolution almost always signals success, as the
filers and management have reached agreement on ways to transform corporate practice and policies
through dialogue. Late last month, a coalition of socially responsible investment (SRI) advocates
withdrew a resolution from JP Morgan Chase (ticker: JPM) when the giant financier
agreed to enhance its environmental risk management.
"The days when just being
willing to dialogue would get a resolution withdrawn are gone," John Wilson, director for SRI at
Christian Brothers Investment Services (CBIS), the lead filer of the resolution, told
SocialFunds.com. "Now, we expect that companies will actually take some concrete steps."
"We recognize the importance of the issues reflected in the shareholder proposal and have steps
underway to address them," said Amy Hayes Davidsen, whose appointment to a newly-established
position as director of environmental affairs at JP Morgan Chase represents one step.
Other steps include the establishment of an office of environmental affairs and of a firm-wide
committee on environmental issues, which will be accountable to the public policy committee of the
Board of Directors. JP Morgan Chase outlined these changes in its 2003 Community
"Like many large financial institutions, JP Morgan Chase has been
involved in financing companies and projects in environmentally and/or socially sensitive sectors
such as dam building, oil drilling, and logging," said Steve Lippman, senior social research
analyst at Trillium Asset Management,
which co-filed the resolution with Domini Social
Investments. Other shareowners in the dialogue group included environmental nonprofit Friends of the Earth and members of the Interfaith
Center for Corporate Responsibility (ICCR), a
shareowner activist consortium.
The resolution cited a number of environmentally
sensitive projects that JP Morgan has financed, exposing itself to risk.
JPMC was a lead manager for a $400 million loan for Iceland's National Power Company (2003), a
project criticized for environmental, geological, economic and legal impacts and risks," the
resolution stated. "The bank also was the mandated arranger for the refinancing of the Kumtor mine
(2002), which has a dangerous environmental and safety record with three toxic spills, including
one that spilled two tons of cyanide into local drinking water supplies."
also pointed out that many of JP Morgan Chase's competitors are taking a more proactive stance on
environmental risk mitigation. For example, Citigroup (C) has signed the Equator Principles, a framework for banks to manage
environmental and social issues in project financing. Citigroup has also entered into an agreement
with Rainforest Action Network (RAN), an
environmental nonprofit, to adopt environmental policies that set the standard for the sector.
"We want to congratulate JP Morgan Chase and at the same time encourage them to move ahead,
since they are behind the commitments that Citigroup has made," said Julie Tanner, Corporate
Advocacy Coordinator for CBIS. "That said, there are still several large banks, including Goldman
Sachs [GS], that
do not have in place what JPMC is developing in terms of having the skeleton outline of an
environmental report, a senior-level person responsible for environmental affairs, and board level
responsibility for environmental issues."
"We see this as an important beginning and
recognize that in the years to come the company will need to explain its programs in greater detail
and report on the implementation of these commitments," Ms. Tanner told SocialFunds.com.