Citi, Wells Fargo shareholders reject proposals on Indigenous rights

Bloomberg

Shareholder proposals calling for Citigroup and Wells Fargo to publish detailed reports about how well those banks are respecting Indigenous people's rights failed to win majority approval on Tuesday.

For the third year in a row, the bulk of Citi shareholders voted against a resolution filed by the Sisters of St. Joseph of Peace in New Jersey and other investor nuns. Twenty-six percent of Citi shareholders voted in favor of the measure, according to preliminary results, compared with 31% last year and 34% in 2022.

At Wells Fargo, shareholders rejected a nearly identical proposal submitted by American Baptist Home Mission Societies and six co-filers. Wells, which did not provide a preliminary tally of votes Tuesday, faced a similar resolution in 2022 that won approval from 25.6% of shareholders.

The results were announced during the two banks' annual meetings, which were held virtually. Religiously affiliated investors have been pressuring megabanks to make disclosures about the effectiveness of their Indigenous rights policies in relation to the funding of certain projects and companies.

Both resolutions that were defeated on Tuesday were advisory, meaning that the banks' boards of directors wouldn't have been required to take action in a scenario where a majority of shareholders voted in favor of them — but the boards could have adhered to the proposals if they wanted to.

Sister Susan Francois of the Sisters of St. Joseph of Peace said the group is encouraged by this year's results at Citi, even though the approval percentage dwindled from prior years. The nuns invest in Citi to generate retirement funds for their elderly sisters and to carry out the mission of the group, Francois said.

Garnering 26% support from shareholders "is still a very significant number," Francois said Tuesday. "If anything, it shows that a substantial number of shareholders will be holding Citi accountable."

The push for large U.S. banks to disclose more details about their adherence to Indigenous people's rights while making lending decisions spread during this year's proxy season, with resolutions filed at three of the four largest U.S. banks.

In addition to the votes Tuesday at Citi and Wells Fargo, JPMorgan Chase shareholders are scheduled to decide next month on a similar measure filed by the United Church Funds. The boards of all three banks recommended that shareholders vote against the proposals.

The shareholder proposals deal with banks' financing of projects that may harm Indigenous people and Indigenous lands. Critics of the banks say there's a risk in making loans for certain projects that might damage Indigenous communities and violate internationally recognized standards for Indigenous people's rights.

Seventeen banks around the world, including Citi and Wells, faced criticism in 2017 for taking part in a $2.5 billion syndicated loan to build the Dakota Access Pipeline, a 1,200-mile-long project between North Dakota and Illinois that was opposed by landowners, including a number of Native American tribes that feared the pipeline's impact on their water resources, livelihoods and cultural heritage. Some banks pulled their funding as a result of protests over the pipeline.

Citi, Wells and JPMorgan argue in their latest proxy statements that their existing policies and practices already take into account how their business activities could impact Indigenous communities.

In response to a question Tuesday from a shareholder who wanted to know how Wells Fargo would address Indigenous rights violations, CEO Charlie Scharf said the company has "existing policies and procedures that underscore the importance of respecting Indigenous people's rights and assessing potential risks to Indigenous communities."

Wells conducts periodic reviews of those policies as part of its policy management and its risk and control system, Scharf said.

Earlier this month, Citi published a seven-page report on its policies and practices regarding Indigenous people's rights. The report outlined the company's due diligence process concerning potential risks, including the bank's process for financed projects and general client relationships.

In the report, Citi said that it flagged 37 projects last year that carried potential risks to Indigenous peoples and required further due diligence. Of those 37, seven were declined due to concerns about risk to Indigenous people's rights and three were approved, subject to ongoing monitoring.

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Sixteen projects were approved after due diligence and/or client engagement, while six are still pending and five did not go forward for reasons that are unrelated to environmental or social risk management, according to the report. In addition, 16 clients were referred last year to Citi's environmental and social risk management team for "enhanced due diligence," Citi said in the report.

The report wasn't enough to quell criticism, however. The Sisters of St. Joseph of Peace said in a recent regulatory filing that Citi's report is "wholly unresponsive" to its request. The group also accused Citi of not consulting with Indigenous communities in preparing the report.

Citi declined to comment Tuesday on the results of the Indigenous rights proposal. It had previously declined to comment on the nuns' criticisms of its report, though it did say that it "welcomes continued engagement with our investors" and that its policies "are aligned with international standards."

Citi's report is a start in a better direction, Francois said.

"It's a baseline," she said. "That can be the beginning of making it stronger and hopefully consulting with some impacted communities" in the future.