Case Study: Stopping Banks from Cutting Off Fossil Fuel Financing at Morgan Stanley

The proposal: Shareholders requested that Morgan Stanley adopt a policy to cease financing new fossil fuel development.

Why it matters: In recent years, there has been an increasing effort to limit the financing available to fossil fuel production. These efforts have contributed to a significant increase in cost of capital for fossil fuel producers, which has a major impact on the global energy system since approximately 80% of the world’s energy comes from fossil fuels. As Russia’s invasion of the Ukraine has shown, U.S. energy security is fundamental to U.S. security. Ill-conceived financing cutoffs that treat fossil fuel production like an illicit activity would directly undermine U.S. national security and the wellbeing of American communities.

The outcome: Fortunately, the proposal failed with only 8.4% of the vote. Though we expect the trend of greater numbers and more extreme climate proposals to continue, for the time being, shareholders are rejecting this overreach and recognizing the critical role that fossil fuels play in supporting U.S. jobs, security and growth.