ESG resolution round-up: Big investors divided on climate proposals at BHP

Apple meanwhile seeks to block a Uyghur region phaseout proposal but faces another on worker freedom of association.

Big institutional investors were divided on two climate proposals that went to the vote yesterday at miner BHP.  

Norway’s trillion-dollar sovereign wealth fund, Norges Bank Investment Management (NBIM), and Californian public pension fund giants CalSTRS and CalPERS were among those opposing the proposals, which focused on the company’s climate advocacy and consideration of climate risks in financial statements. 

By contrast, Dutch giants APG and PGGM supported both resolutions along with Aussie super fund NGS Super.

Overall, just 13 percent of shareholders supported the proposal calling on the miner to “proactively advocate for Australian policy settings that are consistent with the Paris Agreement’s objective of limiting global warming to 1.5C.” 

The other, calling on the company to undertake and include a 1.5C climate change sensitivity analysis in its 2023 financial statements, fared better, attracting support of 19 percent.  

Both resolutions were filed by the Australasian Centre for Corporate Responsibility (ACCR), a non-profit based in Australia. 

The Office of the New York City Comptroller, which oversees the city’s five pension pots, also opposed the policy advocacy proposal, but supported the one on a climate sensitivity analysis.

BHP had recommended that shareholders oppose both resolutions ahead of the vote, as did the big US proxy advisers, Glass Lewis and ISS.  

In September, ACCR withdrew its resolution at Origin after the company agreed to include a 1.5C climate change sensitivity analysis in its 2023 financial statements.   

But BHP stated that such an analysis “would be potentially misleading to users of the financial statements, for BHP to include all the information requested in this Item 15 within the audited financial statements”.   

“These results were strong considering BHP’s unjustified resistance to the proposals,” said Harriet Kater, ACCR’s climate lead.  

“Surprisingly, the BHP board recommended against both resolutions, undermining its supposed commitment to climate change action and best practice disclosure.” 

BHP is a target company of Climate Action 100+, the investor engagement initiative with members holding a combined $68 trillion in assets.  

Last month, Responsible Investor reported that just 10 percent of CA100+ target firms are broadly aligned with the Paris Agreement when it comes to their direct climate policy engagement, according to the latest corporate benchmark analysis from the investor alliance. 

Shifting to the US 

Tech giant Apple is meanwhile seeking to block a shareholder proposal calling on it develop and publish a “phaseout transition plan” to cease any supply chain links with China’s Xinjiang province, “in light of human rights abuses in the region and the reputation and operation impacts posed” to the tech giant. 

The resolution, which was filed by campaign group SumofUs, requests that the “transition plan” be published within a year and include a “reasonable timeframe for completing phaseout of sourcing from Uyghur related labor, such as three years.” 

In August, the UN published a report which found that “serious human rights violations have been committed” against Uyghur and other predominantly Muslim minorities in the Xinjiang Uyghur Autonomous Region.   

Apple is seeking to exclude the proposal via the US Securities and Exchange Commission’s ‘no action’ mechanism, the process by which companies can appeal to the financial watchdog for its blessing to omit an item from being taken to the vote at its annual meeting.  

It argued that the proposal is in breach of the rule around micromanagement (Rule 14a-8(I)(7)) and stated in the filing that its supply chain due diligence “found no evidence that any of its suppliers were located in the Xinjiang Uyghur Autonomous Region or that any workers transferred from the region were working on Apple production lines”.     

Another proposal that will go to the vote at Apple seeks independent assurance on the company’s commitment to workers’ freedom of association and collective bargaining.  

Filed by US-based Trillium Asset Management along with others, including the New York City pension funds, the resolution asks the board to “commission and oversee an independent, third-party assessment of Apple’s adherence to its stated commitment to workers’ freedom of association and collective bargaining rights”. The proposal cites key frameworks such as the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work. 

In August, around a third of shareholders supported a similar proposal filed at electric car maker Tesla. That proposal was filed by US-based SOC Investment Group and Canadian responsible investment body SHARE.  

US investor Nia Impact Capital has also filed a proposal on the issue of dual share class structures at Apple, calling on the company to give access to the board to any shareholder that draws majority support from non-insider shares for its proposal. Access should be granted within three months of Apple filing the results of its annual meeting to the SEC. 

The investor highlighted that in the most recent proxy season, a proposal it filed at Apple on the use of concealment clauses “in the context of harassment, discrimination and other unlawful acts” attracted support of 50.4 percent of non-insiders.  

Nia wrote that “despite the high vote showing that other investors shared these concerns and an explicit request made by Nia and other investors for a meeting, no Board member has agreed to a meeting”. 

Apple is seeking to exclude the proposal on the grounds that it relates to matters of ordinary business (Rule 14a-8(I)(7)).  

Apple has not commented at the time of writing on the proposal from SumofUS.