Influential proxy advisers Glass Lewis and ISS have recommended shareholders oppose the climate progress report from Anglo-Swiss miner Glencore at its upcoming annual general meeting next week (28 April).
Last year, 89 percent of investors voted in favour of Glencore’s climate plan. As part of its Say on Climate package, the company also introduced an annual advisory vote on a progress report against that plan – it is this that the proxy advisers are opposing.
Glass Lewis highlighted the “lack of explicit board-level oversight for climate-related issues” in its rationale for rejecting the report, an issue it described as “particularly concerning”.
By contrast, ISS rejected Glencore’s report in response to the miner’s “activities around thermal coal” and its lobbying activities, which it stated “would appear to run counter to the Paris goals”.
Glencore has responded to Glass Lewis’ recommendations by questioning the “consistency” of the proxy firm’s research.
On the issue of board accountability, Glencore outlined how and where it communicated to investors the board’s oversight of its climate strategy. It also noted that the most recent Net Zero Benchmark assessment by investor engagement initiative Climate Action 100+ (CA100+) found Glencore’s climate governance to be “fully aligned” with its indicators.
The mining giant also questioned the consistency of its treatment with that of Anglo American, whose climate change report has been backed by Glass Lewis. “We have followed an apparently identical process of shareholder engagement to that described by Anglo American in their AGM notice, albeit our earlier engagement led to the inclusion of our Say on Climate vote at our AGM a year earlier,” the company said. “We therefore question the level of consistency in your research, and highlight that your clients (our investors) rely on an objective and methodical approach to proxy research.”
Glencore concluded its two-page rebuttal by asking that Glass Lewis “revisits its assessment accordingly and in particular carries out a fair comparative analysis with the same consistency and thoroughness that was applied to your report on Anglo American’s AGM”.
Earlier this month, both ISS and Glass Lewis supported the climate plan put forward by Glencore’s rival Rio Tinto. In November, however, the duo was split on the merits of BHP’s plan, with ISS giving the miner its “qualified support” and Glass Lewis opposing it over the company’s “lack of science-based targets and its Scope 3 emissions reduction initiatives”. The resulting 84.9 percent support was one of the lowest tallies for a Say on Climate vote to date.
The majority of Say on Climate votes put forward by European companies last year received near-unanimous approval from shareholders, prompting concerns that plans were being rubber-stamped. This month, however, saw the lowest level of support to date for such a vote when more than a fifth of UBS shareholders rejected the Swiss banking group’s climate plan.
Reuters reported that Glass Lewis had recommended investors abstain from supporting UBS’s plan over a lack of disclosure concerning governance of the vote and ISS supported it.
ISS, arguably more progressive on ESG issues than Glass Lewis, has been more conservative in recommending votes against corporate climate plans. But in its advice on Glencore, ISS questioned the company’s use of climate scenarios given Glencore’s focus on thermal coal: “It might appear that the company’s pathway towards its climate goals should follow the IEA net zero scenario for coal production decline, as opposed to the broader fossil fuel path.”
The adviser also stated that, while the company has exited the World Coal Association and is “reviewing other associations”, its concerns around Glencore’s lobbying activities had not entirely been addressed. Last November, climate lobbying think-tank InfluenceMap ranked Glencore as the eighth most obstructive globally on climate action and stated that it was one of the “few companies in the top 25 whose climate policy footprint is predominantly associated with direct advocacy in favour of thermal coal”.
Investors push back against Berkshire Hathaway’s false assertion claim
EOS, the stewardship arm of Federated Hermes, has pushed back against the board of Berkshire Hathaway, which stated that EOS had incorrectly claimed that its 2021 climate proposal had received majority support from non-insider shareholders.
The board of the Warren Buffet-controlled conglomerate made the claim in its proxy statement, filed last month.
“The proponents’ assertion that at the 2021 annual meeting, a significant majority of non-insider shareholders supported a similar resolution is incorrect. In fact, a significant majority of such shareholders did not support the proposal,” they wrote.
In that document the directors also unanimously opposed the proposal, which has been filed again this year by EOS, calling on the Omaha-based firm to report on physical and transitional risks and opportunities linked to climate change.
But last week, the filers of the proposal, which includes Californian public pension giant CalPERS and Canadian investor Caisse de Dépôt et Placement du Québec, laid out in a US Securities and Exchange Commission filing the sums and assumptions behind their assertion.
“The co-sponsors have provided the Company with our detailed and itemised estimates and calculations supporting the co-sponsors’ assertion that Item 2 on last year’s ballot received a majority of non-insider votes cast,” EOS stated.
They also called on shareholders to back the proposal at the company’s annual meeting later this month.
VW’s leadership faces growing opposition following refusal to table investors’ climate lobbying proposal
EOS, whose clients under advice represent $1.6 trillion, has told Responsible Investor that it will be recommending a vote against Volkswagen’s (VW) management and supervisory boards. That decision follows the German car manufacturer’s refusal to table the climate lobbying proposal put forward by seven European institutional investors led by the Church of England Pension Board (CEPB) and Swedish pension fund AP7.
CEPB has already confirmed to RI that it will oppose VW’s leadership because of the company’s decision.
Lisa Lange, lead engager for Germany at EOS, told RI that it was disappointed to see VW reject the proposal on climate lobbying – an issue EOS has been engaging with it on for more than three years.
“As a result of Volkswagen’s lack of action on this issue, we will be recommending a vote against the discharge of the management and supervisory boards,” she said in an email.
Staying in Europe, last week also saw a group of 11 big institutional investors led by Dutch asset manager MN file a climate proposal at TotalEnergies, calling on the French oil major to align its short, medium and long-term emission reduction targets covering its full value chain (Scopes 1, 2 and 3) with a 1.5C warming scenario.
Filers of the proposal, which would require Total to amend its articles of association, include Dutch investors APG, PGGM and Aegon Asset Management and the Greater Manchester Pension Fund.
In 2020, a similar proposal was supported by just 16.8 percent of shareholders.
“With this shareholder resolution we encourage the company to become the first oil and gas giant that has its targets for 2030 completely 1.5-degree aligned and be an example for others in the sector,” said Bas Bijleveld, senior adviser responsible investment and governance at MN.
Moving to the US, a new type of proposal filed this year at Amazon, which asks the online retail behemoth to report on how its 401k pension plan marries up with its own climate goals, will go to the vote after the SEC denied the company’s bid to omit it. Amazon unsuccessfully argued in its “no action” appeal that the proposal, filed by US non-profit As You Sow, fell foul of the SEC’s ordinary business rule.
The same proposal will also go to the vote at Comcast, after the US telecoms giant also failed in its bid to exclude it via the SEC’s “no action” process.
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