ESG resolution round-up: US pension giants split on climate proposal at Japanese bank

CofE votes against National Grid’s CEO and chair over climate lobbying disclosure concerns; support falls for reproductive rights proposals at US firms.

Big US public pension funds are divided on the merits of a climate proposal filed at Mizuho Financial Group which calls on the Japanese “mega-bank” to issue and disclose a transition plan to align its lending and investments with the Paris Agreement.    

Californian giants CalPERS and CalSTRS have pre-disclosed that they will vote against the resolution on Friday, despite supporting a similar request at the bank in 2020. But The Office of the New York City Comptroller, which oversees the city’s five pension funds, has revealed that it will support it.  

Banking has been a focus area for New York City this year, with the Comptroller’s office behind a new proposal asking major North American banks to set absolute 2030 emission reduction targets for high-emitting sectors.  

Climate proposals are still a relatively new feature of the Japanese corporate governance landscape. Mizuho was the subject of the first in 2020, which was filed by Japanese non-profit Kiko Network and secured 34 percent support.   

That resolution called on the bank to disclose its climate risks and publish a plan to align its financial activities with the Paris climate accord. Both CalPERS and CalSTRS supported it, as did New York City.  

According to the latest Banking on Climate Chaos report, Mizuho is the eighth-largest fossil fuel financier since the Paris Climate Agreement was signed in 2015.  

Fellow Japanese banking giants Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group have also been hit with the climate proposal put to Mizuho, which will go to the vote next week. All three were filed by a coalition of environmental NGOs, including Australia’s Market Forces and Kiko Network.  

The group filed additional proposals at Japanese energy giants Mitsubishi Corporation, Tokyo Electric Power Company Holdings (TEPCO) and Chubu Electric Power Co. The three utilities, which hold their meetings in the next week or so, are asked to disclose how their capital expenditure aligns with a 2050 net-zero pathway.

Mitsubishi is also facing an additional proposal from the coalition calling on it to adopt and disclose short and medium-term greenhouse gas emission reduction targets aligned with the goals of the Paris Agreement.    

Lobbying concerns  

On 14 June, 15 percent of shareholders backed a climate lobbying proposal at Toyota, including CalSTRS and CalPERS.  

The resolution, which was filed by European investors APG Asset Management, AkademikerPension and Storebrand Asset Management, called on the Japanese carmaker to amend its articles to include the provision of an annual review into the impact of its policy advocacy efforts and its alignment with the Paris Climate Agreement.  

Another supporter of the proposal at Toyota was the Church of England Pension Board (CEPB), which has taken a leading role on the issue of climate lobbying.  

For instance, the faith investor collaborated with Swedish government pension fund AP7 and French asset manager BNP Paribas Asset Management on the creation of the Global Standard on Responsible Climate Lobbying. 

On Monday, CEPB announced plans to escalate its engagement on the issue at National Grid by voting against the energy firm’s chair, Paula Rosput Reynolds, and CEO John Pettigrew “due to a failure to produce disclosure on the company’s lobbying activities on climate change”. 

“The company is now one of only two European utilities engaged by Climate Action 100+ to have failed to provide its investors with this disclosure,” said Laura Hillis, CEPB’s director, climate and environment. 

“For this reason, we are voting against the re-election of the chair and CEO, who are responsible for providing clear, timely and transparent disclosure on important issues to the company’s shareholders.” 

Reproductive rights  

This Saturday marks one year since the US Supreme Court overturned the landmark 1973 Roe v Wade ruling, ending women’s federal right to an abortion.   

The erosion of women’s reproductive rights in the US is an issue investors have been increasingly asked to opine on, with 31 shareholder proposals filed this proxy season – more than double the number in 2022. 

Divergence in support for a proposal filed both this year and last suggests that investor appetite for such resolutions has dropped, possibly due to the anti-ESG backlash.  

Last year, US retailers TJX, Lowe’s and Walmart were asked to report on risks to their businesses arising from US states restricting access to reproductive healthcare. 

That request, which was backed by influential proxy advisor ISS, attracted substantial support of 29 and 32 percent at TJX and Lowe’s respectively. The proposal at Walmart achieved just shy of 13 percent, but this amounted to around 31 percent when insider votes are discounted. 

This proxy season, however, the same request filed at US firms Coca-Cola, PepsiCo and UPS secured far lower levels of support, averaging just 12 percent.  

In April, Responsible Investor reported that ISS had shifted its position on the resolution, recommending that shareholders vote against it at Coca-Cola.