success of these kinds of votes

2021/05/21

The success of these kinds of votes continues to be hit-and-miss. activists shareholder protested cnn resists "It is not a social or ideological agenda. Key to the Engines victory is that it was able to link its environmental arguments closely to Exxons bottom line, so something that should benefit people and planet was also about protecting profit. In the same vein, Cevian Capital, Europes largest activist investor, announced in March that it intended to punish companies that fail to set environmental, social and governance (ESG) targets when deciding executive pay, although its unclear to what extent this threat has been made good. Beyond disclosures, there are also a range of investment frameworks. investor activism blunting The statement also includes a framework for net zero alignment disclosures based on the TCFD pillars and CA100+ Net Zero Alignment Indicators, offering yet another model for how to manage climate-related disclosures. Ceres has also launched an initiative focussing on lowering the carbon output of six of the US highest emission sectors. It marks an important and high-profile recognition of the risk of oil and gas assets becoming stranded and suggests a credible path through. Both Chevron and Exxonhave also conceded votes requiring them to report on climate on lobbying and to reduce scope 3 emissions. "We know that climate risk is investment risk," he wrote in his 2021 letter. But companies that dont abide by them risk losing control of their boards and the financial support of institutional investors, making them a powerful tool to alter corporate climate behavior. "A CEO shouldn't use house money to further a goal that may not create economic returns. In the UK, climate-related resolutions have been put to eight FTSE 100 companies. The miner saw 94% vote in favour and management pledge to reach net zero by 2050 and cut emissions by 40% by 2030. Fink has made it clear that he sees tackling the climate crisis as above all a smart way to make money. Otherwise, the climate-positive work of the one hand might be unpicked by the business-as-usual acts of the other. Such disclosures, standards, and frameworks are often dogged by a lack of standardisation, making comparisons between businesses difficult for shareholders. Sometimes they even push for the company to be sold or broken up. activism esg shareholder This reflects the concerns many have with a divestment approach that presses companies to dispose of problematic assets rather than take them out of the equation all together. There are some technical problems as well, like a lack of clarity in some instances, and a wider debate about whether yes/no votes are the right way to go or if climate-competent boards would be a more successful next step. Some, like the Climate Action 100+, are also broadening their horizons, to include scrutiny of how well companies are managing the Just Transition i.e. The activist Australasian Centre for Corporate Responsibility (ACCR) for example has brought a claim based on consumer protection against one of Australias largest independent oil companies, Santos, for saying that its natural gas provides clean energy, and that is has a clear and credible plan to achieve net zero by 2040. Whilst positive from the perspective of BHPs climate scorecard, the decision to sell off rather than wind down high-carbon assets does not improve the overall level of carbon emissions globally. Often they put forth a formal proposal for change, which is voted on at the annual shareholder meeting. However, as thinking about bottom-lines increasingly aligns with concern for the planet, we are likely to see more - and more successful - shareholder activism directed towards businesses that are slow to change. The vote passed with overwhelming support, suggesting the value of management engaging with activists. BHP, for example, confirmed in August that it plans to exit oil & gas by merging its petroleum unit with Woodside Petroleum. Environmentalists have also criticized BlackRock's refusal to divest their holdings in fossil fuels, something Fink has called "a bad answer" to stopping global warming. According to an analysis by Bloomberg Intelligence, at the current rate, global ESG assets could exceed $53 trillion by 2025. Rio Tintos AGM in April saw proposals brought forward relating to lobbying and setting emissions reduction targets. These are the core obsessions that drive our newsroomdefining topics of seismic importance to the global economy. Financial Institutions also continue to press companies to be greener. Copyright 2022 Dow Jones & Company, Inc. All Rights Reserved. Last year was a milestone for shareholder activists focused on climate issues.

That change should make it easier for shareholder groups to bring more ambitious resolutions that directly target a companys core operations and sources of emissions. The vote at Costco augers what is likely to be a historic year for climate-focused activist shareholders, who have long lingered on the sidelines of companies annual general meetings, but are now gaining support for their proposals, and racking upwins. Shareholder resolutions in the US arent legally binding. CalPERS Anne Simpson, Managing Director for Board Governance & Sustainability, summed it up like this: If you start peeling off particular issues which shareholders vote on separately, then why arent we simply sitting on the board? In this way he seems to enjoy the best of both worlds, walking a tightrope between corporateand environmental interests. This was for fear that these kinds of votes allow rubber stamping of weak climate plans instead of pinning responsibility on directors. The lack of consistency at present can hinder transparency to the extent they make comparisons across different business difficult. These people use their position as shareholders of publicly traded corporations to put pressure on a company's management and influence how it is run. The Swiss Re Institute reported that global insured catastrophe losses topped USD$42 billion in the first of 2021, driven by increased bad weather events due to climate change. Take a look at the beta version of dw.com. Shareholder resolutions related to climate concerns have been on the rise in recent years. The proposal went on to win 98% of shareholders approval, in part demonstrating the value to management of being proactive in suggesting actions, rather than appearing to be reactive to activist pressures. 1, it is worth noting that the resolution was filed by shareholders representing a tiny fraction of BHPs shares (less than 0.006%), underlining the impact even very small activist shareholders can have if they can mobilise support from larger institutional investors. Asset managers should be voting as a default position in favor of shareholder proposals on climate. In September, a coalition of 220 financial institutions whose assets amount to more than USD$29.4 trillion sent a letter to over 1,600 companies saying only science-based targets for reducing emissions will be acceptable, and that a failure to align with the climate science threatens a safe and prosperous economy. The rest of the economy is to follow by 2025 according to the governments energy white paper. The plan sets minimum expectations about what a transition plan for oil and gas must include. Your opinion can help us make it better. Glass Lewis, another of the worlds largest asset managers, opposed 87% of these votes in 2019, but 75% this year. Although the vote failed (only a fifth voted in favour), it garnered double the votes won by the previous climate resolution in 2019, suggesting that whilst shareholders are giving boards a chance, they are keeping the spotlight on them to offer credible transition plans. https://www.barrons.com/articles/esg-sustainable-climate-investing-shareholder-activism-51655249538. This copy is for your personal, non-commercial use only. ", How Georgia State University Increased Graduation Rates. The combination of incoming and yet-to-be revealed ESG-related legal obligations, restive shareholders holding companies increasingly to account, and physical impacts from climate change on, for example, global supply chains, will all combine to see a likely increase in climate-related impacts, litigation and disruption. This follows targeting by Royal London Asset Management under the CA100+ campaign. In recent years, however, there has been a greater emphasis on environmental, social and governance concerns (ESG). You can find more information in our data protection declaration. An extraordinary 99% of votes in support came after the miner recommended earlier in the year that shareholders vote in favour of the proposals. Potentially unsubstantiated claims can also draw the ire of regulators as DWS is finding out in Germany and the US, following allegations that Deutsche Banks asset management arm misleadingly claimed that more than half of its $900 billion in assets under management have been invested in accordance with ESG criteria.

Companies need to hear from their investors that climate plans are not just a nice to have, theyre a must-have.. Since then, there have been around 700 shareholder resolutions on environmental and social issues around the world, of which a little under half focussed on environmental issues. At least 44 climate-specific resolutions reached a vote globally in 2021, according to Bloomberg Intelligence. We're not done yet! Our emails are made to shine in your inbox, with something fresh every morning, afternoon, and weekend. Legal notice | In the US, it has increased from 36% last year to an impressive 55%. Taking NZICI as an example, it has brought together 12 global investment consulting firms, setting them nine actions to undertake in order to support reaching net zero. In November, the US Securities and Exchange Commission made it easier for shareholders to include ESG issues on a company's proxy statement, which provides essential information ahead of the annual meeting of the shareholders. Dozens of climate-related shareholder resolutions are on the tableat oil majors, banks, tech companies, and others, to be voted on over the next few months. More institutional investorspension funds, university endowments, and the likeare threatening to pull hundreds of billions of dollars from asset managers that dont vote in support of climate resolutions (asset managers commonly vote on behalf of their clients, a practice known as proxy voting). Until a clear winner emerges, it will be difficult for businesses and everyone else to know which is best and how best to invest and report in a way aligned with the Paris Agreement. Engine No. Once a certain level of disclosure is widely mandated, it should allow activist and other shareholders to more accurately and intensively engage. "But we also believe the climate transition presents a historic investment opportunity.".