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ESG resolution round-up: Is investor support for corporates’ climate plans waning?

A record 37% of investors have rejected Santos’s climate plan, while UK banks Barclays and Standard Chartered have also seen significant opposition.

Say on Climate votes put forward by European companies last year received near-unanimous acceptance from shareholders. Research by proxy solicitation company Georgeson, for instance, put average support in 2021 at 97 percent.  

Since the launch of the Say on Climate initiative – the brainchild of Sir Chris Hohn and his UK hedge fund The Children’s Investment Fund (TCI) – concerns have been raised that the vote could become an “ineffective compliance mechanism”, akin to the Say on Pay vote in the US, leading to the rubber stamping of inadequate plans. 

Could the sky-high tallies we have seen to date indicate that that fear is manifesting or was 2021 simply a year in which investors were beginning to grabble with the new stewardship mechanism? 

There are signs that investors are becoming more discerning. On Wednesday, Say on Climate votes put forward by UK banks Barclays and Standard Chartered saw significant pushback, with investor opposition of 19 percent and 17 percent, respectively.  

The day before, 37 percent of shareholders voted against the climate plan offered by Australian oil and gas giant Santos, a result believed to be the largest opposition to a Say on Climate vote to date. That tally replaces the previous record that was set just last month when 22.3 percent of shareholders voted against a plan put forward by Swiss banking group UBS on 6 April.  

Despite the revolt against Santos’s climate plan, less than 15 percent of investors voted for a shareholder proposal on the company’s climate lobbying activities.  

“Santos shareholders have revolted against the board’s climate plans while rubber-stamping the company’s lobbying activities,” said Dan Gocher, director of climate and environment at the Australasian Centre for Corporate Responsibility (ACCR), the nonprofit behind the proposal.  

Another indication that investors are becoming more forceful on the company’s climate votes was the 24 percent opposition to Glencore’s climate progress report last month, despite 94 percent of investors signing off on the miner’s three-year plan last year in a Say on Climate vote.  

Miner Anglo American and Swiss building materials giant Holcim, however, drew large support for their climate plans this year. Anglo American’s Say on Climate vote saw support of 94 percent at the firm’s AGM on 19 April, and Holcim’s attracted 90 percent support on Wednesday. 

Hesitancy on banks?  

According to the most recent Banking on Climate Chaos report, there has been no slowdown in fossil fuel financing. The influential report found that “taken as a whole, bank fossil fuel financing stayed flat from 2020 to 2021,” with the 60 biggest fossil fuel financiers providing $741 billion to the sector. 

Despite this, last Friday, just 18 percent of investors supported a climate proposal at Credit Suisse. The proposal called on the Swiss bank ranked 19th in the report for fossil fuel financing – to amend its articles of association to include a requirement to annually disclose its progress towards aligning its activities with the Paris Agreement.  

Ahead of the vote, RI reported that the Amundi-backed proposal had divided some of the big US public pension funds, with New York City’s funds supporting and CalPERS opposing.  

A similar request put to Standard Chartered on Wednesday attracted even lower levels of support, just 11 percent.  

The tally at Standard Chartered aligns with shareholder backing for proposals this proxy season at US banking heavyweights Citi, Bank of America and Wells Fargo, which called on them to align their fossil fuel financing policies with achieving net-zero emissions by 2050. All three US banks are ranked in the top four fossil fuel financiers.  

Even Engine No1, the activist fund which led a successful campaign against the board of US oil major ExxonMobil last year, voted against the proposals at the US banks.  

A spokesperson for the Engine No1 told RI: “While we agree with the spirit of the proposals, as written they did not provide adequate flexibility for banks to finance the fossil fuel and energy transition.

“People still need fossil fuel. We want to see a fast and as-clean-as-possible transition to net zero, but in getting there banks need flexibility to finance that transition.” 

Investors push Citi and Wells Fargo on indigenous peoples’ rights 

Much bigger tallies were secured at Wells Fargo and Citi (26 April) on protecting the right of indigenous peoples, with 25 percent of investors supporting a proposal on the issue at the former and 33 percent at the latter. Both proposals, which were filed by US faith investors, requested that the banks report on how they protect indigenous peoples’ rights in their financing activities.  

Another majority vote on corporate use of NDAs, this time at IBM  

Corporate use of concealment clauses – non-disclosure agreements with staff – is high on the agenda of shareholders this year, with majority support for another proposal on the issue, this time at IBM.  

The 65 percent tally at the US tech giant, believed to be the largest support to date, comes hot on the heels of majority support for a similar proposal filed at Apple this year. 

Both proposals asked the companies to report on the use of such clauses in the context of “harassment, discrimination and other unlawful acts”.  

Kristin Hull, founder and chief executive of Nia Impact Capital, the US investor behind the proposal at Apple, told RI that concealment clauses are “completely appropriate” when it comes to protecting things like intellectual property. But, she added, “what they’re not appropriate for is anything that has to do with HR, so anything about how a worker is treated or for covering up anything that investors need to know about company culture.” 

Other results: 

More than 90 percent of shareholders supported a management-backed proposal at Boeing, calling on the aircraft maker to report on how it intends to align with the net zero indicator laid out in Climate Action 100+’s corporate Net Zero Benchmark. That proposal, which went to the vote on 29 April, was filed by US nonprofit As You Sow.  

Just 16 percent of shareholders supported a resolution at Marathon Petroleum, asking the US oil giant to report on how it is managing the social impact of its climate change strategy on workers and communities, and ensuring a Just Transition. The resolution, which was filed by North American union Teamsters, went to the vote on 27 April.   

Two climate proposals filed at Berkshire Hathaway achieved support of 26 percent at the company’s annual meeting on 30 April. The tally is estimated to be over 45 percent when the votes of insiders are discounted. One of the proposals, led by EOS, the stewardship arm of Federated Hermes, called on the Warren Buffet-controlled conglomerate to report on physical and transitional risks and opportunities linked to climate change. The other, filed by As You Sow, requested that the Omaha-based firm report on how it plans to reduce greenhouse gas emissions associated with its underwriting, insuring and investment activities in line with the Paris Agreement’s 1.5°C goal.   

Finally, today sees the first proposal this proxy season from Dutch climate activist Follow This go to the vote at Occidental Petroleum. The resolution calls on the US oil giant to set short-, medium-, and long-Paris-aligned emissions reductions targets, covering the full value chain of the company’s operations.