ESG round-up: Say on Climate proposals drop by almost half in 2023

The latest developments in sustainable finance: Vanguard lags BlackRock and State Street on ESG resolutions; SBTi releases three resources for public consultation.

The number of Say on Climate proposals filed at companies globally nearly halved this year, according to a report by the French SIF. The research found that 23 proposals were submitted in 2023, compared with 48 in 2022. However, while the volume of resolutions was down this year, the average approval rate remained high at 89.2 percent. France saw even higher numbers, with a 93.3 percent average approval rate, compared with 87.9 percent in 2022. On climate resolutions more generally, ISS data identified more than 180 shareholder climate resolutions in 2023, with 86 in the US, 49 in Japan, and 22 in Europe at an average approval rate across all three geographies of 17.4 percent.

BlackRock and State Street supported twice as many ESG resolutions as Vanguard in the two years to end-March, according to a report by Morningstar. The index provider examined 100 “key” resolutions filed at S&P 100 companies. Vanguard opposed nearly three-quarters of the proposals examined and lagged behind BlackRock and State Street on key resolutions relating to climate change, other environmental issues, political influence, workplace equity, human rights and ethical use of technology, and civil rights and racial equity.

The Science Based Targets initiative (SBTi) has published three new draft resources for the financial sector for public consultation. The three documents include a net-zero standards conceptual framework for financial institutions, which lays out the initial criteria; updates to the SBTi’s existing near-term framework to align financial institutions’ emissions reduction targets with 1.5C; and a fossil fuel finance position paper. The consultation will close on 14 August.

The passive investment workstream for the Glasgow Financial Alliance for Net Zero (GFANZ) will undertake a study of existing guidance with respect to net-zero corporate engagement and investor recommendations on enhancements to net-zero benchmarks, people familiar told Responsible Investor. A final report on the topic is due next year. GFANZ put out a call in April for applicants to join five workstreams, which include passive investment.

The EU’s Platform on Sustainable Finance is examining the feasibility of constructing ESG benchmarks which address gender diversity and the four non-climate taxonomy objectives: biodiversity, pollution prevention, water and the circular economy. Article 9 funds are required to use investment benchmarks aligned with their sustainability objectives for reporting purposes, but such products are not widely in use. The plans were announced by Andreas Hoepner, a member of the platform, at RI Europe last week. A timeline for the project has not been revealed.

Switzerland has voted in favour of a new climate law which commits the country to cutting net greenhouse gas emissions to zero by 2050. A majority of 58 percent of voters approved the government’s Climate Protection Targets, Innovation and Strengthening Energy Security Act on Sunday. The law includes several measures for meeting the net-zero goal, including energy reduction initiatives, interim national and sectoral emissions reduction goals, and incentives to move certain sectors away from fossil fuel-based power.

The Singapore government has stressed its efforts on climate change and commitment to net zero by 2050 after Dutch asset manager Van Lanschot Kempen blacklisted the country’s state-backed assets due to environmental concerns. Earlier this month, Singapore was reported to have failed an updated ESG test used by the manager to screen for environmental risks. A Kempen senior executive told Bloomberg that “the direction of travel in both biodiversity and climate is in reverse” in the country. In response, Singapore government agencies and ministries issued a statement outlining their strategy on climate action and advised Kempen to look into the country’s sustainability commitments more closely.

Canadian insurer Beneva has become the latest member to leave the Net-Zero Insurance Alliance (NZIA). In a statement, the company said it had withdrawn from the organisation due to the “growing political debate concerning ESG criteria in the US, [which] is a distraction from the actions around which the company wishes to rally”. As with other insurers that have exited the alliance, Beneva said it will continue its work on transitioning to a greener economy, and is still committed to reaching net zero emissions by 2050 through its UN’s Principles for Sustainable Insurance membership.

The Institutional Investors Group on Climate Change (IIGCC) has published a steel purchaser framework to support investors’ engagement with companies on low-emissions steel procurement. The guidance – written in consultation with investors, steel purchasers and steel-producing companies – also enables benchmarking of targets against a 1.5C pathway. It includes a series of questions investors can ask purchasers on their net-zero strategies. Topics include current steel usage, purchasing mix and emissions intensity, future targets, and potential barriers to low-emissions steel.

The University of Montreal has announced plans to launch a multidisciplinary research hub to study ESG issues. The Michael D Penner institute for ESG issues – backed by Partners Group chair Michael Penner and the Bank of Nova Scotia – will look to draw expertise from a range of academic disciplines to study topics including climate change and DE&I. Charles Edmond, chief executive of the Caisse de dépôt et placement du Québec, and Rania Llewellyn, CEO of Laurentian Bank, will lead the institute’s advisory committee.