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

Climate lobbying vote makes Aussie history, as Barclays shuns investor-backed proposal on fossil lending

Climate lobbying vote at Santos sets new Australian record as investors press Australian oil and gas giant on Paris alignment

Two climate proposals at Santos enjoyed unprecedented shareholder support today at the oil & gas giant’s virtual annual meeting, with a record-breaking one on lobbying making Australian corporate history.

The first resolution, on setting targets aligned with the Paris Accord (covering Scope 1, 2 and 3 emissions), was supported by a massive 43% of shareholders.

Even more impressive, however, was the second proposal, calling on Santos to ramp up its disclosures around climate-related lobbying, which was backed by 46.35% of investors — a new Australian record, surpassing the 46.32% vote at Origin Energy in 2018, also on lobbying.

Both proposals were filed by influential shareholder advocacy group the Australasian Centre for Corporate Responsibility (ACCR) and were publically supported by numerous international public pension funds, as reported by RI this week.

Proxy advisory firms ISS, Glass Lewis and PIRC also, crucially, supported the proposals, as they did with the lobbying one at Origin in 2018, underlining the importance of their advice.

Today’s result is a stark contrast to last year, when both Santos and fellow Australian oil & gas major Woodside denied shareholders a vote on climate proposals on a technicality.

On Twitter, Brynn O’Brien, ACCR’s Executive Director, wrote: “WOW. 43.39% (~62% of floating stock!!) of @SantosLtd shareholders supported @AustCCR’s shareholder resolution calling for the company to set climate targets. 46.35% (~66% of floating stock) supported our call for the company to review its lobbying agenda.”

“This voting outcome is very promising for the AGM season in Europe, where Shell and Equinor face resolutions with the exact same request for Paris-aligned targets for all emissions (Scope 1, 2, and 3)”, added Mark van Baal, Founder of Follow This, the Dutch non-profit which filed the proposals at the two European oil heavyweights.

Woodside will face the same climate proposals, alongside one on its advertising at its annual meeting in Perth on April 30th — though shareholders are “strongly encouraged” not to attend the meeting in person but attend via a livestream.

Barclays accused of kicking climate can down the road

This week saw Barclays — reportedly Europe’s largest fossil fuel financier — counter a climate proposal calling on the UK banking group to wind down its financing of fossil fuel firms not aligned with the Paris climate goals.

That proposal was led by shareholder advocacy NGO ShareAction, backed by an international group of institutional investors.

In a filing to the London Stock Exchange on Monday, however, Barclays unveiled its own proposal to be put to shareholders outlining its “ambition” to become a net-zero bank by 2050 and its commitment to align its financing activities with Paris, including setting “transparent targets” and reporting on them from 2021.

In the bank’s notice of annual meeting published today, it formally opposes ShareAction’s resolution, arguing that it is “too narrowly focused on the ‘phase out’ of support to clients” and “does not pay sufficient attention to the importance of transition and of taking our clients with us on this journey”.

It continues: “It is only by banks and energy companies working together constructively that real progress can be made in tackling climate change, and the ShareAction resolution does not, in our view, properly allow for this.”

Barclays calls on shareholders to “endorse” its proposal and states that its board does not support ShareAction’s.

London-based foundation Lankelly Chase, co-filer on the ShareAction proposal, slammed the bank’s proposal as a “rehash” of existing commitments, including those under the Principles of Responsible Banking, designed to “gain plaudits”.

“If a net-zero ambition does not involve phasing out fossil fuel financing, then what does it mean? Investors should ask what Barclays’s ambition will amount to if it doesn’t encompass at the very least a timescale for phase-out”, said Dominic Burke, Investment Director of Lankelly Chase.

“The time for carefully drafted position statements has passed. Investors must support the original resolution and show they intend to hold Barclays to account for its response to the climate emergency”.

ShareAction has called on investors to support both resolutions at the bank’s annual meeting on May 7th.

Moving to the US:

Lobbying

US private prison firm Geo Group’s attempts to exclude a shareholder proposal on its direct and indirect lobbying activities have been rejected by the US Securities and Exchange Commission (SEC).

The Florida based firm, which recently announced a five-year contract with the US Immigration and Customs Enforcement, argued in its ‘no action’ letter that the proposal, filed by the Service Employees International Union Pension Plans Master Trust, was the “latest effort in a multi-front campaign mounted by the Proponent against GEO”. The regulator did not agree.

Another lobbying proposal, this time at the world’s biggest asset manager Blackrock, has been withdrawn by the Unitarian Universalist Association.

According to the Ceres database, the US investor withdrew the proposal – which called for greater transparency on issues such as support for trade groups that might be working against global climate goals – after securing a commitment from Blackrock.

The investment behemoth had already avoided a proposal on its poor ESG proxy voting record. US SRI firms Boston Trust Walden and Mercy Investments pulled resolutions at Blackrock and JP Morgan Chase in the wake of sustainability commitments made by the financial heavyweights, including signing up to Climate Action 100+, the multi-trillion investor engagement initiative.

But Blackrock is one of four US financial giants that will face shareholder proposals calling them to put meat on the bones of the commitments their CEOs put their names to in the Business Roundtable’s (BRT) statement on the purpose of a corporation, which appeared to advocate a shift towards stakeholder capitalism.

US pharmaceutical firm McKesson has filed a ‘no action’ letter at the SEC in a bid to exclude a proposal on its own BRT commitments filed by US non-profit, As You Sow, arguing it has already substantially implemented the proposal.

As You Sow highlights in its proposal that the Texas based firm has paid $2.2bn in legal settlements since 1995 in misconduct cases.

Sexual harassment

Comcast, which owns US TV network NBC, is seeking to exclude a proposal urging it to conduct an investigation and report on the risks posed by the telecommunications giant’s failures to prevent workplace sexual harassment.

The resolution, which was filed by US activist investor Arjuna Capital, cites allegations that NBC covered up accusations against a former Today host and also raises questions about how the company handles sexual harassment complaints throughout its business.