Blackrock, which has talked up its commitment to sustainability in recent months, has revealed that it did not support the record-breaking climate votes at Australian oil & gas giant Santos in one of its new ‘voting bulletins’ — a disclosure mechanism recently introduced by the investment giant to “enhance” transparency around its stewardship practices.
Earlier this month, two climate proposals filed by shareholder advocacy group the Australasian Centre for Corporate Responsibility (ACCR) at Santos achieved unprecedented support from shareholders.
The first, on setting Paris-aligned climate targets, was supported by 43% (around 62% of floating stock) of shareholders and is believed to be the largest vote on a Scope 3-emissions proposal.
“If proxy advisers are starting to say we believe that asking for Scope 3 targets is a reasonable request in the interests of our client, that’s a big deal” — Brynn O’Brien, ACCR
This impressive tally, however, was surpassed by a second proposal on Santos’ lobbying activities, which made Australian corporate history with 46.35% (~66% of floating stock) support.
Santos is a target company for Climate Action 100+ (CA100+) – the investor engagement initiative focused on steering the world’s dirtiest companies towards Paris alignment – and corporate climate lobbying has become a major focus of the group.
Blackrock joined CA100+ in January, the same month its CEO and Chair, Larry Fink wrote to companies and clients, separately, pledging to ramp up its efforts on sustainability.
In the bulletin, BlackRock – which this year escaped a shareholder proposal on its poor ESG voting record – outlined its rationale for opposing the resolutions.
Blackrock recommends that “any future proposals [on Paris aligned targets] be structured to provide shareholders with the opportunity to vote on each class of emissions separately”.
It states that while it shares the concerns raised in the proposals, ultimately, it decided to give the company another year to demonstrate “meaningful progress”.
The investment giant points to the fact that the company has reported in line with the TCFD since 2018 as a sign of its willingness to engage.
But the investor also warns that should Santos fail to act it may reconsider its position on “similar proposals in the future”.
Scope 3 emission targets, it seems, are a step too far for Blackrock, which recommends in the bulletin that “any future proposals [on Paris aligned targets] be structured to provide shareholders with the opportunity to vote on each class of emissions separately”.
The lobbying proposal was opposed by Blackrock because of the company’s “public commitment to undertake a more comprehensive review of its industry association advocacy”.
RI has asked Santos for details of that review, but had not heard back at the time of writing.
US proxy advisor supports climate proposals at another Australian oil & gas giant, following record result at Santos
The strong shareholder backing for the Santos climate resolutions were buoyed in no small part by the support of the big US proxy advisors, ISS and Glass Lewis.
The latter is now also recommending support for same climate proposals (Paris aligned targets and lobbying) at Santos’ rival Woodside, paving the way for another big result later this month (30 April).
Glass Lewis’s advice also supports the reelection of Ian McFarlane, a former Australian minister and current CEO of peak mining trade body, the Queensland Resources Council.
Brynn O’Brien, Executive Director at the ACCR told RI that if ISS also backs the Woodside proposals, as it did at Santos, it would be a “really significant step”.
“If proxy advisers are starting to say we believe that asking for Scope 3 targets is a reasonable request in the interests of our client, that’s that’s a big deal”, she said.
Moving to the US:
Business Roundtable proposals
Neither Glass Lewis or ISS, however, are supporting the proposal at Bank of America, which calls on the US banking group to outline how it plans to meet the commitments its CEO put his name to in the Business Roundtable’s (BRT) statement on the purpose of a corporation.
UK proxy and governance firm, PIRC, however, is recommending a vote for the proposal, arguing that “shareholders have the right to ask if anything has changed” following the summer statement, which appeared to herald a shift away from the dominant shareholder-primacy model of capitalism.
The vote at Bank of America’s annual meeting next week (22 April) will be the first outing for the BRT proposal, a variation of which will be put to fellow US financial heavyweights Blackrock, Citi Group and Goldman Sachs this proxy season. Only JP Morgan Chase successfully managed to exclude the resolution.
Sexual harassment
Comcast, which owns US TV network NBC, has failed in its bid to exclude a proposal urging it to conduct an investigation into the risks posed by its alleged failures to prevent workplace sexual harassment.
The US Securities and Exchange Commission (SEC) did not agree with the company that the proposal fell foul of the rule on micromanagement by shareholders.
Energy
Two separate proxy solicitations have been filed at Duke Energy by shareholders urging support for their proposals at the US energy firm.
The first was filed by US non-profit Majority Action, and calls for support for its proposal on separating the CEO and Chair roles at the North Carolina-based firm, arguing that Duke Energy’s “costly failure to adopt a meaningful decarbonisation plan” warrants support for an independent chair.
The other proxy solicitation was filed by US faith investor Mercy Investment Services and calls for investors to back its proposal on greater disclosure around Dukes Energy’s lobbying.
And finally, in South Africa:
Standard Bank is refusing to table a climate risk shareholder proposal at its annual meeting next month (29 May), according to co-filers the RAITH Foundation and South African non-profit Just Share.
Last year, the Johannesburg-based banking group allowed South Africa’s first ever climate proposal to go to the vote, despite its opposition to it — a decision that it was praised at the time.
But it has now signalled its intention to block a proposal this year on its exposure to climate risks through its lending book — though it has not formally excluded it yet.
Standard Bank is reported to have written in an email to the co-filers that it regards a shareholder proposal as a “last resort measure” to be used only “when engagement with management on the pertinent issues has been exhausted”.
JustShare is now asking the bank to explain the legal basis for that view, claiming there is no provision for it in the nation’s Companies Act.
In contrast, rival Absa Bank — formerly Barclays Africa — has voluntarily included a “Non-binding advisory vote on climate change risk and opportunity disclosure” at its annual meeting in June. In its notice of AGM, the bank’s board describes the vote as “first step” to integrating sustainability into its operations and strategy.
Just Share has said it will be seeking “clarity” from the Johannesburg Stock Exchange on the non-binding status of the vote.
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