Buffett’s Berkshire rejects climate resolution as expert urges European Commission to force ‘say on climate’ votes at companies

Developments come Say on Climate campaign scores victories at Nestle and Santos

Warren Buffet is the latest figure to wade into the climate disclosure debate, as experts urge the EU to include ‘say on climate’ votes in new governance rules. 

Speaking yesterday, Rients Abma, Director of Dutch corporate governance and sustainable investment platform Eumedion, called on the European Commission to mandate votes for investors on corporate climate strategies as part of its upcoming Sustainable Corporate Governance Directive.

“An annual shareholder vote on a company's transition plan may focus boards on enhancing their planning and reporting on addressing climate change,” said Abma, who is also a member of the Commission’s Expert Group on Technical Aspects of Corporate Governance Processes and the Shareholder Rights Committee of the International Corporate Governance Network. “And implemented through legislation, it would ensure a broad-based, consistent approach by all companies in the EU.”

The comments were made during a webinar conducted by the EU’s Responsible Business Conduct Working Group, and reflect those made in Eumedion’s response to the official EU consultation on Sustainable Corporate Governance, which closed last month. 

Abma pointed to the Commission’s 2017 decision to introduce a ‘say on pay’ rule – giving investors influence over how much company directors are paid – into the Shareholder Rights Directive. He described a similar mechanism for climate strategies as the “next step”.

His call comes as the Say on Climate initiative, a campaign led by billionaire hedge fund manager Sir Chris Hohn, scored wins at Australian energy firm Santos and food and drink heavyweight Nestlé this week.

Santos agreed to introduce a shareholder vote on its climate disclosure, planning and management at its 2022 AGM in response to a resolution filed by the Australasian Centre for Corporate Responsibility, while Nestle made similar commitments after a proposal from Ethos Foundation and seven undisclosed Swiss pension funds.

Say on Climate has also secured agreements from Moody’s and Spanish airports company Aena since it launched last year. Resolutions have also been lodged with Alphabet, S&P Global, Charter Communications, Australian energy company Woodside and building materials firm LafargeHolcim. 

Investment icon Warren Buffet has been at the centre of the climate disclosure discussion this week after it was revealed that his conglomerate, Berkshire Hathaway, had asked shareholders to reject a shareholder resolution on climate from a number of high-profile investors. 

The proposal, filed by EOS – the stewardship advisory arm of investment house Federated Hermes – was submitted on behalf of asset owners and managers including CalPERS, Caisse de dépôt et placement du Québec and Federated Hermes. It calls on the company to publish an annual assessment addressing how it manages physical and transitional climate-related risks and opportunities.

The shareholders said “the Company’s current level of disclosure [is] insufficient for investors to fully appraise its material climate-related risks and opportunities”.

In a filing to the US Securities and Exchange Commission, Berkshire Hathaway said it did not consider the resolution “necessary” as the board “regularly receives reports on the major risks and opportunities of the operating companies, including those related to climate, and discusses those risks and opportunities”. It also added that the multinational “manages its operating businesses on an unusually decentralized basis” and that the proposal was “inconsistent with Berkshire’s culture”.

The board also pushed back against a proposal from shareholder advocacy group As You Sow, which sought data to gauge the success of Berkshire’s diversity and inclusion programmes.