ESG resolution round-up: Refined Follow This proposals filed at oil majors

Filing ahead of the 2023 proxy season gets underway, with proposals on reproductive rights and racial justice returning.

Dutch climate activist Follow This has again filed proposals at some of the largest oil majors on either side of the Atlantic, including BP, Shell, Chevron and Exxon, but with some alterations, following a loss of momentum in the 2022 proxy season. 

This year, support of Follow This resolutions calling for Paris-aligned emission reductions across the entire value chain, including Scope 3 emissions, dipped at oil majors. For instance, the proportion of investors supporting them fell 10 percent to 20 percent at Shell and more than 5 percent to 15 percent at BP. 

In the US, similar proposals filed by Follow This fared worse than those calling for general emission reductions targets the year before, which achieved majority support at Chevron (60 percent), ConocoPhillips (59 percent) and Phillips 66 (80 percent). This year’s proposal calling for Paris-aligned emissions reduction targets, covering Scopes 1,2 & 3, was supported by 32 percent at Chevron.  

For the 2023 proxy season, the Follow This proposal at Shell and BP encourages the majors to align their existing 2030 emission reduction targets with the goals of the Paris Climate Agreement, including emissions related to the use of its energy products.  

At the US duo, the activist is calling on Chevron and Exxon to set “medium-term reduction targets” covering emissions of their energy products “consistent with the goal of Paris”.  

“The focus on Scope 3 by 2030 leaves the oil majors no wiggle room for smokescreens about ‘net zero emissions by 2050’ or reduction targets for operational emissions (Scope 1 and 2, around 5 percent of emissions),” said Follow This founder, Mark van Baal. 

Van Baal told Responsible Investor that Follow This had spoken to “a lot of investors” supportive of its proposals before drafting the latest ones, and was told that “Scope 3 by 2030 is really what is at stake.” 

Six investors are involved in the co-filing of the four proposals, including Edmond de Rothschild Asset Management (on Shell), Degroof Petercam Asset Management (all four resolutions) and Achmea Investment Management (Exxon). The three other co-filers were not disclosed.  

Both Degroof Petercam and Achmea are members of Climate Action 100+, the multi-trillion-dollar investor group targeting the world’s biggest emitters.  

RI reached out to the CA100+ lead investors on each of the four majors targeted this year to gauge their support for the Follow This proposals but most said it was too early to say.  

In May, RI reported that Dutch investors MN and PGGM had been appointed as the new CA100+ lead engagers at Shell, replacing Church of England Pension Board (CEPB), Robeco and the Universities Superannuation Scheme (USS).   

Reproductive rights return for the 2023 proxy season 

The issue of reproductive rights will return for the 2023 proxy season, following the filing of a proposal at  Pfizer by the Tara Health Foundation. The resolution calls on the US pharmaceutical giant to disclose how its lobbying and political spending aligns with its stated goal to “end discrimination against women, ensure equal opportunities for leadership and access to reproductive health”. 

This year, pioneering reproductive rights proposals at US retailers TJX and Lowe’s saw substantial support of 29 and 32 percent, respectively – a substantial tally for a first time proposal. Another at Walmart secured less support, attracting just shy of 13 percent.  

The companies were asked to report publicly on known and potential risks and costs to their business “caused by enacted or proposed state policies severely restricting access to reproductive health care”. Furthermore, they were asked to detail any strategies “beyond litigation and legal compliance” they might undertake to “minimise or mitigate these risks”.     

The proposals were filed in the months before the leak from the Supreme Court on Roe v Wade, and went to the vote before the landmark 1973 legislation, which protected the right to an abortion in the US, was repealed.  

Pfizer is seeking to exclude the proposal via the US Securities and Exchange Commission’s ‘no action’ process, arguing that it has already substantially implemented the request.  

Racial justice looks set to be key issue again 

This year saw a 40 percent increase in the number of shareholder proposals on racial justice, many of them calling for independent audits at US corporate giants. Eight of the audit proposals achieved majority support from investors this year, including at fast food chain McDonald’s. 

US investor Nia Impact Capital has filed a proposal for 2023 at Abbott Laboratories calling for the commissioning of a racial justice audit. The US healthcare company is seeking to exclude it on a technicality.  

This week, JPMorgan Chase’s racial equity audit was criticised by SOC Investment Group, the US investment firm that pioneered the audit proposal and pushed the US financial heavyweight to commit to undertake it.  

In its analysis of the audit, which JPMorgan published last month, SOC Investment stated: “JPM and PwC [which performed the audit] 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.” 

Other shareholder proposal news 

Online giant Amazon has been hit with a shareholder proposal calling for it to measure and disclose its full value chain emissions, including those from all products it sells. The resolution was filed by Amalgamated Bank and Green Century Capital Management, with the support of non-profit As You Sow. 

Last week, RI reported that Canadian responsible investment body SHARE and SOC Investment had filed a new proposal at Amazon, calling on it to commission an independent assessment into how faithful it is to its commitment to the rights of workers to unionise.    

Finally, earlier this month a tax transparency proposal filed at Microsoft drew support of 23 percent of investors. The proposal, which was filed by Danish fund AkademikerPension, followed one at fellow tech firm Cisco this month, which fared better with 27 percent support. 

Three more proposals on tax are set to go to the vote at Chevron, Exxon and ConocoPhillips.