Few people are in a position to influence Jamie Dimon, the chief executive who turned JPMorgan Chase & Co. into the biggest U.S. bank. The longtime climate skeptic who turned Exxon Mobil Corp. into the biggest U.S. oil company is one of them.
Lee R. Raymond, 81, holds the top position on JPMorgan’s 11-member board after Dimon. He has occupied his seat for 33 years, making him both the longest-serving and oldest director among Wall Street’s biggest banks. He helped guide JPMorgan through mega-mergers after mastering them at Exxon, backed Dimon during his rise and has stood by him. Even as the bank draws fire for lending billions to the fossil-fuel industry, the former oil executive’s power inside the $2.7 trillion financial firm has gone little noticed.
That’s about to change.
A nonprofit group called Majority Action is beginning a fight this week to use shareholder voting to remove Raymond from JPMorgan. The group argues that Raymond’s role as the lead independent director and his coziness to Big Oil compromises JPMorgan’s capacity to react to the climate crisis.
For more information, see Majority Action’s SEC filing. An excerpt:
Climate change poses systemic risks to the global financial system and specific risks to financial institutions with exposure to the fossil fuel sector. JPMorgan Chase (“JPM”), the largest US bank, is by far the largest global lender and underwriter to the fossil fuel sector, providing nearly $196 billion in lending and underwriting in the three years (2016-2018) since the Paris Agreement was adopted in 2015.1 JPM is also a leading funder within many of the riskiest and most potentially harmful fossil fuel sectors, including Arctic oil and gas, tar sands, and coal mining. JPM will need to enhance its governance and management, as well as disclose and reduce its risks and financed emissions in order to protect long-term shareholder value. Thus far the company has not acted with the urgency and scale that the climate crisis requires.
JPM CEO Jamie Dimon is also the Chair of the company’s board of directors, which places the onus on the Lead Independent Director to provide the oversight and guidance that long-term shareholders require as the climate crisis escalates. However, this role is held by Lee Raymond, who is uniquely poorly qualified to provide the oversight needed to protect long-term shareholder value in the face of these risks:
● Raymond has served on the Board of JPM (and its predecessor) for 33 years, and as lead independent director for 19 years, far longer than corporate governance best practices suggest.
● Raymond was Chair and CEO of ExxonMobil (and its predecessor Exxon) from 1993-2005. During that time, he was the architect and public face of ExxonMobil’s efforts to promote denial of the risks and likelihood of climate change, even after Exxon scientists warned executives of the dangers of warming due to rising CO2 emissions.
● Raymond’s family members, and potentially Raymond himself, have ongoing financial exposure to the fossil fuel industry at a time when financial leaders and regulators are warning of the risks of sudden re-valuations of asset values in the sector. Re-assessments of these assets could be affected by the actions of the financial institutions like JPM that own, manage, and finance them, creating potential conflicts of interest.
Shareholders have repeatedly tried to enhance corporate governance at JPM, including by pushing the company to adopt an independent Board Chair. Over 34 percent of shares voted backed such a proposal in 2018, the last time it was filed, as did proxy advisor ISS. An independent chair proposal will appear on JPM’s proxy statement in 2020, and we recommend that climate-concerned investors vote FOR this measure in order to promote robust and independent oversight over the growing risks climate change poses to JPM investors and the financial system overall. Moreover, should he be re-nominated for a 34th year on the board, we recommend that shareholders vote AGAINST Lee Raymond.