ESG resolution round-up: Investors throw weight behind thermal coal proposal at Glencore

CalSTRS gets tougher on climate and diversity as LGIM files stranded assets proposal at Exxon.

Nine investors, including Scottish Widows, Man Group and Brunel Pension Partnership, have backed a climate proposal at Glencore asking the Swiss miner to disclose how its thermal coal production aligns with the Paris climate agreement.  

The resolution was co-filed in December by Legal & General Investment Management and HSBC Asset Management, with support from seasoned filers the Australasian Centre for Corporate Responsibility and UK-based non-profit ShareAction. 

It asks Glencore to disclose how the firm’s projected thermal coal production and thermal coal capital expenditure align with the Paris Agreement’s goals and the International Energy Agency Net Zero Emissions pathway.  

According to the proposal, this information should be presented as part of the company’s transition plan and voted on by shareholders at its 2024 annual general meeting.  

Glencore’s own climate plan was the worst-supported in Europe last year, with 76.3 percent of shareholders voting in favour. By comparison, according to US proxy solicitation firm Georgeson, the average support for 2022 corporate transition plans in Europe was around 91 percent.   

For this year’s proposal, other newly declared supporters include Border to Coast Pensions Partnership, Swiss pension fund PUBLICA and Fulcrum Asset Management.  

Not on the list, however, are Royal London Asset Management and Northern Trust, which co-lead engagement on the Glencore as part of Climate Action 100+. 

CA100+ is the multi-trillion-dollar investment engagement initiative targeting the world’s largest emitters. LGIM, HSBC AM and fellow co-filers Ethos Foundation – the body representing large Swiss pension funds and foundations – and Australian super fund Vision Super are all members of the initiative.   

LGIM pushes Exxon on stranded assets  

LGIM is also behind a climate proposal this year at ExxonMobil, calling on the US oil major to “fully disclose” how the IEA’s net-zero scenario would impact the retirement of its assets.

The trillion-dollar manager has co-filed the request with US-based Christian Brothers Investment Services (CBIS), whose proposal at Exxon last year calling for audited report assessing the financial impact of the IEA’s net-zero scenario assumptions, including future asset retirement obligations, attracted majority support (51 percent). 

Despite the show of support for the 2022 resolution, CBIS’s CIO, John Geissinger said Exxon’s disclosures still give investors little insight into how retirement costs might accelerate and to what extent.

“Exxon may assume an asset can operate indefinitely, but this may not prove out,” he said. “Investors are simply asking: what is the total cost of meeting these liabilities?”   

LGIM’s head of investment stewardship and responsible investment integration, Michael Marks, added that the two filers “are seeking greater clarity into the costs associated with the retirement of Exxon’s assets, in the event of an accelerated energy transition”. 

Church of England to vote against VW’s boards again over climate lobbying  

The Church of England Pensions Board (CEPB) has pre-declared its intention to vote against VW’s management and supervisory boards for the second year in a row, in response to the German carmaker’s failure to meet its expectations around climate lobbying and emission reduction targets.  

Last year, the £3 billion ($3.73 billion; €3.41 billion) fund opposed VW’s boards after the company once again refused to table the climate lobbying proposal it put forward with other big European investors. The company argued that the topic was beyond the competence of shareholders to vote upon. 

This prompted CEPB to join forces with other co-filers, including Swedish public fund AP7, to start legal proceedings against Volkswagen in October to test whether the company has the right to exclude the item from its annual general meeting. 

Over the past four years, CEPB, which leads engagement with VW as part of CA100+, has “repeatedly called for the company to set emissions reduction targets aligned with limiting global warming to 1.5C, and a climate lobbying and industry associations disclosure”, said Laura Hillis, director of climate and environment, in a statement on Friday.  

“Given the company is still yet to meet these expectations, as shareholders we intend to use our votes to hold the board of management and the members of the supervisory board accountable.”   

CalSTRS ups the ante on directors over climate and diversity 

Californian pension giant CalSTRS has laid out its minimum expectations around climate disclosures and diversity, warning boards that they face votes against directors if they do not meet them. 

The $300 billion fund wrote on Monday that it expects all portfolio companies to align financial reports with the recommendations of the TCFD and include “at a minimum” their direct and indirect emissions (Scopes 1 and 2).  

“CalSTRS will vote against directors at the largest global companies that do not provide this minimum level of disclosure,” the fund giant said in a statement. 

The investor also revealed that it is getting tougher on the issue of diversity, warning firms that it will vote against an entire board of directors if they do not include at least one woman, and against a board’s nominating and governance committee if at least 30 percent of board members are not women. 

Plastics proposal garners substantial support at Dow 

Close to a third of shareholders backed a proposal on single use plastics at Dow last Thursday, in yet another sign that the issue is gaining traction among investors.  

The proposal, filed by US non-profit As You Sow, called on the chemical giant to issue an audited report on how a reduction in demand for virgin plastic would impact its financial position and related assumptions. 

Last year, an incredible 95 percent of shareholders voted in favour of a plastic packaging proposal at fast food firm Jack in the Box. Not only was it the highest support for a proposal on the issue of plastics but also the largest support ever for a sustainability-related resolution opposed by the company itself.     

Another proposal at Phillips 66 asking the oil firm to disclose how it could shift its production away from virgin plastics to recycled ones was supported by 50.4 percent of shareholders in 2022.   

Misaligned political expenditures at Disney 

Earlier this month, a proposal at Walt Disney calling for enhanced disclosure on how the entertainment giant’s political expenditures align with its publicly stated values and policies was supported by more than a third of shareholders (36 percent.) 

The resolution, which was filed with the support of Rhia Ventures, a US impact fund focused on women’s reproductive and maternal health, highlighted areas of alleged incongruity such as the company’s donation to supporters of a Florida law dubbed “Don’t Say Gay”, despite its professed support for the LGBTQ community.  

Regulators should ‘discourage’ virtual only AGMs, says ICGN 

Influential corporate governance body ICGN has called on regulators to “discourage” companies from offering virtual-only annual general meetings.  

Emergency changes introduced during the pandemic, while necessary at the time, came at the expense of shareholder rights, the body wrote in a statement on Wednesday, adding that this fact must be “recognised by regulators and companies alike”. 

It called on regulators to “adequately consult with shareholders and stakeholders in the event any changes to regulation or legislation regarding AGMs, particularly matters impacting shareholder rights”.