The US State Treasurers of Illinois, Vermont and Connecticut have announced that they will vote against top figures at US energy firm Duke Energy in response to governance failings around climate change.
The trio will vote against Duke’s CEO and Chair, Lynn Good, and its Lead Independent Director, Michael Browning, at its AGM this week (6 May).
The news follows BlackRock’s vote against two directors at Warren Buffet’s Berkshire Hathaway over climate this weekend – more evidence that climate competence of boards is rising up the agenda for investors.
On Saturday, the investment behemoth voted against the re-election of Berkshire Hathaway’s former Chairman of the Audit Committee, Thomas Murphy, and the Chairman of its Governance Committee, Walter Scott, due to “concerns over shortfalls in the company’s governance practices and climate action planning and disclosure”.
Blackrock also supported proposals on climate risks and opportunities and on annual diversity and inclusion reporting at the Omaha-based firm.
The treasurers’ vote at Duke is part of the Proxy Voting for 1.5°C World initiative, which is led by US non-profit Majority Action and seeks to hold board directors accountable for failures to address systemic risks associated with climate change.
Illinois State Treasurer Micheal Frerich, Vermont State Treasurer Beth Pearce, and Connecticut State Treasurer Shawn Wooden, who together act as fiduciaries of tens of billions of dollars in public money, have all said they will vote against Duke’s Good and Browning.
Duke Energy is the largest generator of electricity and second largest carbon emitter in the US. It is also one of the target companies of Climate Action 100+, the investor engagement initiative backed by $54trn in assets.
Treasurer Pearce said of the vote: “CEO and Chair Lynn Good has failed to align Duke’s decarbonisation plans and policy influence with its net-zero commitment, and Lead Independent Director Michael Browning – after 31 years on the board of Duke and its predecessors – has failed to provide robust independent oversight of these risks. Duke’s board must be held accountable – there is no time for delay.”
Last year, the Office of the New York City Comptroller, which oversees the City’s five public pension funds, withheld support from five of Duke Energy’s directors, including Good and Browning.
Californian pension giant CalPERS similarly withheld its support from Browning and two other directors at Duke Energy’s 2020 annual meeting. This year, however, the $450bn fund has disclosed that it will vote for all directors, as well as supporting a proposal calling for an independent Chair. That proposal was filed for the second year running by the Office of the New York City Comptroller, and last year garnered support from 40% of shareholders.
A climate lobbying proposal at Duke in 2020 got 42% support. The filer, Mercy Investment Services, has withdrawn the resolution this year after the company agreed to evaluate and report on its lobbying activities, including their alignment with the Paris Agreement. Duke published its 10-page report in March.
Another proposal at Duke, this time on setting emissions reductions targets, was also withdrawn by US non-profit As You Sow after the company agreed to further dialogue.
Duke Energy will, however, face a proposal on its political contributions, filed by the New York State Common Retirement Fund.
Last week, a proposal on plastic pollution saw the largest ever support for an environmentally focused proposal, after 81% of shareholders backed the proposal at DuPont calling on the US chemical giant to report on spills of plastic pellets that are released into the environment. The proposal at DuPont was filed by As You Sow.