May round up: the latest on global ESG-related resolutions

Australian corporate history was made yesterday – for the second time in April – after the majority of shareholders (50.16%) in Woodside Petroleum backed a proposal calling on Australia’s largest oil & gas firm to set and disclose targets aligned with the Paris Agreement, covering Scope 1, 2 and 3 emissions.

Dan Gocher, Director of Climate and Environment at the Australasian Centre for Corporate Responsibility (ACCR), the influential NGO behind the proposal, described the vote as a “a breakthrough moment for investor action on climate change in Australia”.

“Until Woodside explains how its business will align with the goals of the Paris Agreement, the company will be in open conflict with the majority of its shareholders,” he pointed out.

The same proposal was backed by an unprecedented 43% of investors when it was put to Woodside’s rival Santos earlier last month, but the Woodside vote snatches both the Scope 3 record and the title for the largest shareholder-backed proposal ever in Australia.

Last month, an ACCR-led climate lobbying proposal at Santos garnered 46.35% support, smashing the previous record (46.32%) at Origin Energy in 2018, also on lobbying.

Tellingly, the common denominator between all these record-breaking resolutions is the support of the big US proxy advisors ISS and Glass Lewis – a testament to the clout their advice carries.

Both advisors also supported a climate lobbying proposal at Woodside, which was also backed by an impressive 42% of shareholders yesterday, at the Perth-based firm’s online meeting.

Barclays’ climate “ambition” proposal draws support of proxy advisors and Norway’s $1trn sovereign wealth fund at expense of investor resolution on Paris-aligned financing  

Neither ISS or Glass Lewis are, however, supporting the investor-backed resolution calling on Barclays to wind down its financing of fossil fuel firms not aligned with the Paris climate goals.

Instead, the proxy giants have backed the counter proposal put forward by the UK banking group in March, pledging its “ambition” to become a net-zero bank by 2050.

Both ISS and Glass Lewis regard the bank’s proposal as broadly responsive to investors’ concerns, and also cite technical difficulties with supporting both proposals. ISS highlights the potential legal uncertainty that might arise if both binding proposals, which carry a 75% threshold, are passed. Glass Lewis calls such a scenario potentially “problematic”.

Barclays – reportedly Europe’s largest fossil fuel financier – was criticised for putting forward a counter proposal to the investor-backed one led by NGO ShareAction, with critics seeing it as an attempt to kick the climate can down the road.

‘Until Woodside explains how its business will align with the goals of the Paris Agreement, the company will be in open conflict with the majority of its shareholders’ – Dan Gocher, ACCR

But ISS concludes that Barclay’s board “should be provided sufficient latitude to now develop its strategy without the potential threat of legal ambiguity” and recommends a vote against the investor proposal. Glass Lewis agrees with this verdict in its voting advice.

Despite the “legal ambiguity”, investors M&G, Brunel Pension Partnership, Merseyside Pension Fund and EOS, the engagement arm of Federated Hermes, have all revealed this week that they intend to support both the Barclays and the ShareAction proposals.

But in a blow to the ShareAction proposal, today, Norges Bank Investment Management, manager of Norway’s $1trn (€900bn) sovereign wealth fund, has announced that it will vote for the Barclays proposal but not the investor-backed one.

Barclays’ annual meeting takes place on 7 May.

New York State and Church Commissioners up the ante on ExxonMobil: Climate Action 100+ lead investors call on shareholders to consider board votes 

Last week, the New York State Common Retirement Fund and the Church Commissioners wrote an open letter to shareholders in ExxonMobil urging them to take “implement a strong voting stance on director election” in response to what they describe as the board’s continued failure to respond to climate risk.

Last year, the pair, which lead engagement with the oil major for CA100+, called on shareholders to support a proposal calling for an independent chair at Exxon and, separately, announced their intention to vote against the entire board.

The move was in response to Exxon’s recalcitrant position on climate change and its successful exclusion of shareholder proposals on the issue using the SEC ‘no action’ process – a mechanism that the company has used well this year too.

Now, the investors are actively calling on peers to join them, saying: “It is crystal clear to us that ExxonMobil’s inadequate response to climate change constitutes a broad failure of corporate governance and a specific failure of independent directors to oversee management”.

Exxon’s annual meeting takes place on 27 May.

Did Blackrock drive a historic vote on capital management?

Another historic vote was seen this week, this time in the US, where two proposals on human capital management disclosure at manufacturers Fastenal and Genuine Parts received backing of 61% and 79%, respectively.

As You Sow, the US non-profit behind the proposals, said it is “likely” that, given the large votes and the fact that Blackrock owns more than 5% of both companies, the US investor supported the proposals – a sign perhaps that Blackrock is stepping up its expectations on ESG disclosure, as it promised to do in January.

Moving to Canada

Yesterday, another Paris-alignment proposal, received big support from investors. Canadian oil & gas giant Ovintiv saw a resolution backed by 56% of its shareholders, as well as Glass Lewis. It was filed by the Pension Plan of the United Church of Canada with the support of the Shareholder Association for Research & Education.