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AGM Season: The latest on ESG-related resolutions – June 12th 2020

Aussie superfunds’ record on climate votes scrutinised, as Blackrock reveals it voted against climate proposal at Total and raises questions about Scope 3 emissions targets

Aussie superfunds’ record on climate votes scrutinised

Eight Australian super funds, which are also members of the Investor Group on Climate Change (IGCC), supported less than half of climate-related proposals (138 out of 686 proposals) between 2017 and 2019, the Australasian Centre for Corporate Responsibility (ACCR) has revealed in its latest report ‘Two Steps Forward, One Step Back’.

They are: Cbus, AustralianSuper, BT Financial Group, Media Super, Russell Investments, First State Super, UniSuper and AMP – all except Media Super are also members of Climate Action 100+, the investor engagement initiative targeting the world’s dirtiest companies. 

The new report analyses the voting behaviour of Australia’s 50 largest super funds on 686 ESG shareholder proposals across five countries.

Just seven funds were found to have supported a majority of proposals between 2017 and 2019: Local Government Super (82%), HESTA (66%), Vision Super (66%), Macquarie (62%), Cbus (59%), Mercer (58%) and Qantas Super (57%).

Overall support for ESG resolutions declined to 48% in 2019 from 53% in 2018, losing some of the ground it gained from 2017 when support stood at just 33%.

“Many of the funds which make up the $3trn Australian superannuation industry have made public commitments to their members about responsible or sustainable investment, and their oversight of ESG issues”, said Dan Gocher, Director of Climate and Environment at the ACCR.

“This report shows that the voting behaviour of several of these funds is at odds with these commitments.”

The ACCR was behind the record-breaking climate resolutions at Australian oil & gas giants Santos and Woodside this year, including one which garnered majority support (50.16%) and called on Woodside to set and disclose targets aligned with the Paris Agreement. 

Blackrock reveals it didn’t support climate proposal at yet another oil major

The world’s largest asset manager, whose CEO and Chair, Larry Fink committed to ramping its action on climate change in January, has revealed that it did not support the climate proposal at Total last month (29 May), repeating its voting stance on similar resolutions at oil & gas majors Shell, Woodside and Santos this year. 

Just shy of 17% of shareholders supported the proposal at Total, which called on the French oil giant to amend its articles of association so that it must report yearly on its efforts to align with Paris, including disclosing “appropriate targets” for the “reduction of direct or indirect greenhouse gas emissions”.

It was filed by 11 European investors including Actiam, Candriam and Sycomore. 

Blackrock highlighted the company’s recent 2050 ‘net-zero’ commitment – which it regards as market leading – as justification for its decision and expressed unease about changing the company’s articles.

Concerns, however, have been raised by other shareholders both about the meaningfulness of recent commitments by European oil majors and their strategic timing ahead of big climate votes. 

In its disclosure of the Total vote, Blackrock again raises questions about the appropriateness of Scope 3 emission reduction targets for oil majors, arguing that such emissions are partially beyond their control  and will depend on actions by other stakeholders, such as policymakers.

“Most of Total’s Scope 3 emissions come from the Scope 1 emissions of Total’s customers”, Blackrock writes

Blackrock did, on the other hand, publicly rebuke Exxon Mobil last month over its poor governance of climate risks, revealing that it voted against two of the US oil giant’s directors and supported a shareholder proposal calling for an independent chair.

On the very same day (27 May), Blackrock was among the majority of shareholders (53%) to support the proposal at Exxon’s rival Chevron, calling on the US oil major to disclose how its lobbying aligns with the goals of the Paris Agreement. 

Sexual harassment

Around 13% of shareholders supported a proposal at Comcast last week urging the telecommunications giant, which owns US TV network NBC, to report on the risks posed by its alleged failure to prevent workplace sexual harassment. 

The resolution, which was filed by US activist investor Arjuna Capital, highlighted allegations that NBC covered up accusations against a former Today host, and also raised questions about how the company handles sexual harassment complaints throughout its business. 

Another proposal on strengthening policies on sexual harassment was supported by 13% of investors at Walmart.

CEO pay

Just 10% of shareholders supported a proposal at TJX calling on the US retail giant to factor in worker salaries when determining CEO pay, despite the fact that the current CEO to median pay ratio is 1,596:1. The proposal was filed by Boston-based SRI firm Trillium Asset Management. 

Tech giants

A proposal at Alphabet calling on the Californian tech giant to establish a human rights risk oversight committee was supported by 16% of shareholders, translating to roughly 45% of the independent votes when votes controlled by the company are removed. The resolution, which was one of 10 filed at the parent company of Google this year, was led by NEI Investments, Federated Hermes and Robeco. 

The most-supported proposal at Alphabet called for the establishment of equal voting rights – known as “one share, one vote” – it drew support of around 31% of shareholders. 

16% of shareholders also supported a resolution calling Alphabet to report on its use of controversial contracts that prevent employees from pursuing claims against the company in court – so called Employment-Related Arbitration. Last month saw majority support for a similar proposal at US fast food chain Chipotle.