Whereas: Banks play a critical role in meeting the Paris Agreement’s goal of limiting global temperature rise to well below 2 degrees Celsius. The Bank of England notes the global financial system supports carbon-producing projects that will cause global temperature to rise over 4 degrees Celsius – more than double the limit necessary to avoid catastrophic warming.

The 2018 Intergovernmental Panel report on climate warns that global warming above 1.5 degrees Celsius will create devastating impacts including loss of life, infrastructure damage, supply chain dislocations, lost production, and water and energy disruptions. If warming is kept to 1.5 degrees Celsius versus 2 degrees, studies indicate a potential savings of $20 trillion to the global economy by 2100. Just 215 of the biggest global companies reported almost $1 trillion at risk from climate impacts, some within five years.

Estimates indicate the value of risk under business-as-usual scenarios may be equivalent to a permanent reduction of 5 to 20 percent in portfolio value in just over a decade. There are increasing state and local regulations for energy projects, increased barriers to high carbon projects, and shifting market expectations related to future energy needs. A recent Carbon Tracker report estimates that almost a third ($2.3 trillion USD) of potential capex to 2025 for oil and gas companies should not be deployed under the International Energy Agency’s World Outlook 2016 450 scenario (a proxy for well below 2-degree Celsius scenario). Community Trust Bancorp, Inc. also stands to benefit from contributing to the funding required for a successful low carbon transition by seeking out green opportunities across all business functions. An estimated $90 trillion of investment is required by 2030 to limit global warming to 2 degrees Celsius. The financial sector has a key role in enabling the transition to a low-carbon future, including small and mid-cap banks.

While Community Trust Bancorp acknowledges business might be “adversely impacted to the extent that weather-related events cause damage or disruption to properties or businesses,” it also states climate change initiatives will adversely impact business. The company has seen the impacts of the declining coal industry in its market area and has had to diversify its portfolio. Community Trust does not yet measure or disclose to investors its carbon emissions, nor has it adopted targets to reduce its lending related to emissions. Banks that finance carbon intensive fossil fuel activities through lending are putting themselves and society at risk of catastrophic climate impacts.

RESOLVED: Shareholders request that Community Trust Bancorp issue a report, at reasonable cost and omitting proprietary information, discussing the range of risks associated with maintaining its current levels of carbon-intensive lending.

Supporting Statement: Shareholders recommend the report include, among other issues at board and management discretion:

• Reputational risks associated with being a financier of fossil fuels;
• Risks to the bank associated with an unanticipated policy response from governments to address dramatic increases in harmful climate events;
• Risks to the bank associated with negative economic impacts of a 2, 3, or 4-degree Celsius rise in global temperatures.