Investors Seek Greater Climate Action in 2021 Proxy Season

While most companies annual general meetings are taking place between mid-April and the end of June, the Ceres Investor Network has notified an increase of investors’ demand for greater climate action in 2021 Proxy.

Investors’ increasing concerns about the climate crisis are reflected in 136 climate-related shareholder resolutions filed so far this year and in stepped up engagement, as investors seek to hold companies accountable for mitigating both the systemic and business-specific risks of global warming, according to the sustainability nonprofit Ceres (that includes 185 institutional investors with combined assets under management of $31 trillion).

In a year when hundreds of investors have pledged to engage with companies on the work needed to hold global temperature rise to 1.5 degrees Celsius, Ceres found engagements have led to 54 shareholder resolutions being negotiated and withdrawn before going to a vote as companies agreed to take actions sought. 

A number of the agreements focus on plans to set corporate science-based targets for reducing greenhouse gas (GHG) emissions, such as those reached at Citigroup, JP Morgan Chase and others.

The second largest number of resolutions filed focus on lobbying disclosure, as investors recognize the systemic risk of the climate crisis and the need for government policies that meet the Paris Agreement goals.

Last year, the U.S. experienced 22 climate-related weather disasters that each caused more than $1 billion in damages – far and away a record.  To investors, climate change poses not only physical risks of damage to assets, supply chains and infrastructure but also transitional risk if portfolio companies do not adjust rapidly enough as the economy decarbonizes, and systemic risk posed to the entire economy. Government policy is needed to ameliorate systemic risk, but companies also have a critical role to play.

Ceres is tracking 20 lobbying proposals 12 of which ask companies to disclose how their climate lobbying aligns with Paris. They include resolutions at Delta Airlines, ExxonMobil—the oil major considered the furthest behind in climate action — filed by BNP Paribas Asset Management, and at Boeing, Citigroup, Dominion Energy, General Motors, Phillips66 and United Airlines.

Shareholder resolutions are voted on by all shareholders of a company before or during its annual general meeting. Resolutions are non-binding recommendations to management, but research indicates that any proposal that garners at least 30% of shareholder support tends to lead a company to take action.  

In addition to proposals on emissions and lobbying, this year includes resolutions seeking improved climate governance by corporate boards, promises to correct the harm brought on by petroleum processing for plastics, promises of ‘Say on Climate’ asking companies to submit a net-zero transition plan to a vote of shareholders annually and, at several banks, disclosure of plans to reduce emissions resulting from their financing. 

Article: Joana Foglia – Source: CERES, Climate Action, Paris Aligned Investment Initiative

Post Author: Wealth Monaco