ESG resolution round-up: NBIM shares details on first climate proposals

Proxy advisers throw weight behind thermal coal proposal at Glencore; ISS supports Follow This at TotalEnergies but opposes activist’s binding proposal at Shell.

Norges Bank Investment Management (NBIM), the manager of Norway’s trillion-dollar sovereign wealth fund, has provided details on its first climate proposals, revealing that it filed at four US companies this proxy season. 

In January, the giant fund’s CEO, Nicolai Tangen, stated in an op-ed in the Financial Times that it planned on filing its own proposals at climate laggards this year.

A spokesperson for the fund told Responsible Investor that climate proposals had been filed at Packaging Corporation of America, Marathon Petroleum, NewMarket and Westlake Chemical.  

The experimental filings were done without fanfare, as were the withdrawals at Packaging Corporation of America and Marathon Petroleum, following commitments from the duo.  

NBIM declined to comment on what had been agreed to prompt the withdrawal of the proposals. 

The resolution at NewMarket, which asked the lubricant and fuel additives producer to set Paris-aligned emission reduction targets, was backed by 28 percent of shareholders late last month.  

Westlake, which held its annual meeting on 11 May, was asked by NBIM to strengthen its 2030 emission reduction target and set long-term targets to align business activities with the Paris climate agreement. Results from the chemical and plastics company’s annual meeting have not yet been added to the US Securities and Exchange Commission’s website.  

Proxy giants back thermal coal request at Glencore  

Influential proxy advisers ISS and Glass Lewis have thrown their weight behind the climate proposal at Glencore, asking the Anglo-Swiss miner to disclose how its thermal coal production aligns with the Paris Agreement.    

ISS is also recommending that shareholders oppose Glencore’s annual climate progress report, repeating a position both it and Glass Lewis took last year.  

As part of its Say on Climate package, in 2021 Glencore committed to offering shareholders an advisory vote on its transition plan every three years, with an annual advisory vote on progress. Its inaugural plan was supported by comparatively low 89 percent of investors. 

Close to a quarter of shareholders rejected Glencore’s 2022 climate report, the lowest level of support on a Say on Climate vote last year in Europe.

Glass Lewis noted the miner’s responsiveness to investor concerns and its subsequent enhanced disclosure in its rationale for supporting the climate progress report this year. 

But ISS stated that “questions persist as to whether the company’s targets are aligned with the Paris Agreement.” The adviser also raised concerns about Glencore’s advocacy and lobbying activities.  

The support of the big proxy advisers is likely to substantially swell support for the proposal, which has already been publicly backed by big investors, including Scottish Widows, Man Group and Brunel Pension Partnership. 

The resolution, which goes to the vote on 26 May, 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. 

ISS stated that there is “no obvious disadvantage to shareholders’ interests in the acceptance of this proposal”.

“The points on which the shareholder seeks clarification are legitimate, and reflect deficiencies identified in the analysis of the framework of the transition plan, on previous occasions,” it added.  

ISS supports Follow This at Total

The proposal filed by climate activist Follow This at TotalEnergies has received a boost this week after it was reported by the Financial Times that ISS was backing it in its benchmark advice.  

ISS has supported Follow This before in its sustainability advice at a European oil major, but has rarely supported its resolutions in its main advice. RI understands that the only other time was in 2020 at Norwegian oil giant Equinor.  

The proposal at Total, which asks the French oil major to align its 2030 Scope 3 emission reduction targets with the Paris Agreement, was co-filed with 17 European investors, including Man Group, PGGM and MN. 

“We are very pleased that ISS advises to vote in favour of our resolution,” Colin Tissen, engagement analyst at Dutch investor PGGM, told RI. “This is a critical milestone towards an accelerated climate transition at TotalEnergies.” 

Unlike other Follow This resolutions, the request at Total is “consultative” rather than binding. Last year, Total’s board refused to allow a similar binding shareholder resolution to go to a vote on the basis that it encroached on “the public policy competence of the board of directors to define the company’s strategy”. 

This was despite allowing a climate resolution to go to the vote in 2020, attracting support close to 17 percent.   

Total’s annual meeting is on 26 May. 

Despite its support at Total, ISS is not supporting the same request by Follow This at Shell next Tuesday (23 May) in its main advice – although it does support it in its sustainability offering, RI understands.

PGGM’s Tissen told RI that the fund “regrets” that ISS is not supporting the Follow This proposal at Shell. 

“ISS fully accepts the merits of the same proposal at Shell but recommends a vote against it because it is binding and would force a change in strategy,” he said.   

PGGM co-leads engagement with Shell as part of Climate Action 100+, the multi-trillion-dollar investor engagement initiative, and recently pre-declared its support for Follow This ahead of the oil giant’s annual meeting. 

Like at Total, but binding, the Follow This resolution asks Shell to align its existing 2030 Scope 3 reduction targets with Paris, but Tissen believes it is worded such that it leaves the “company sufficient freedom” to determine how.  

JPMorgan Chase audit chair faces backlash 

JPMorgan Chase hosts its annual general meeting today (16 May). In addition to shareholder proposals on fossil fuel financing, absolute emission reduction targets and political expenditures, the US banking heavyweight is also facing a vote-no campaign against the re-election of the chair of its audit committee, Timothy Flynn.  

SOC Investment Group, the US manager behind the campaign, has raised concerns in a filing at the US Securities and Exchange Commission that JP Morgan’s appointment of PwC to undertake its racial justice audit, while simultaneously serving as the bank’s longstanding financial auditor, poses a potential conflict of interest that could impair PwC’s independence.  

JPMorgan Chase had not commented at the time of writing. 

The bank committed to undertake a racial justice audit in 2022 following shareholder pressure, including 40 percent support for a proposal calling for one filed by SOC Investment.  

The audit was released later that year and faced heavy criticism, with SOC Investment stating at the time that, “JPM and PwC appear to have a basic misunderstanding of what a racial equity audit is and should be, despite being provided highly instructive samples from other prior civil rights audits conducted by Starbucks, Airbnb and Facebook.”  

Tejal Patel, executive director at SOC Investment Group, told RI that of the 20 or so pending racial equity audits, “no one but JPMorgan has used their own external financial auditor as their racial equity auditor”. This also applies to those undertaken or being undertaken by the bank’s peers, including Wells Fargo, State Street, BlackRock and Citi, she said.  

Upcoming votes 

This week, insurer Hartford Financial Services (17 May) and banking group Morgan Stanley (19 May) face shareholder proposals asking them to adopt time-bound fossil fuel financing phase out policies – requests that have struggled for support at other US financial firms this year.  

Insurer Chubb is also facing a climate proposal on Wednesday, asking it to disclose 1.5C-aligned medium- and long-term greenhouse gas emissions targets for its underwriting, insuring and investment activities. This disclosure-based request looks like it will fare better than one calling for time-bound phase-out plans, attracting the support of NBIM and Californian pension giant CalPERS.