Mining giant BHP saw the most substantial shareholder opposition to a ‘Say on Climate’ vote to date yesterday, with a reported 17% of investors voting against its recently-unveiled Climate Transition Action Plan at its London annual general meeting.
While the result is not final – the dual-listed company will put the same plan to shareholders in the Australian side of its business next month – it signals a shift in investor sentiment over ‘Say on Climate’ votes.
BHP is one of the growing number of firms to offer shareholders an advisory vote on their climate transition plans, following a high-profile initiative launched by Sir Chris Hohn and his UK hedge fund The Children’s Investment Fund (TCI) last year.
Figures from proxy firm ISS show that 13 EU companies proposed say-on-climate votes in 2021, compared to 0 in the previous year. To date, most of those votes have received near unanimous approval from shareholders. Recent research by proxy solicitation company, Georgeson, found that average support at European firms has been 97% – including 94% for the climate plan of BHP rival Glencore in April. According to the analysis, the only other company to secure less than 90% support so far is oil giant Shell (88.7%).
So, while the BHP result has been hailed by some media outlets as a resounding endorsement of the firm’s transition plans, on closer inspection, it may indicate a less enthusiastic response from shareholders than in previous cases.
The disagreement between the big proxy advisors on the merits of BHP’s plan is likely to have contributed to the lower levels of support yesterday. Earlier this month, RI reported that ISS and Glass Lewis were split on BHP’s plan. The former gave its “qualified support” to the miner, describing its climate commitments and reporting as “reasonable, given the state of technological innovation”. Whereas Glass Lewis advised shareholders to reject the plan, citing concerns over BHP’s “lack of science-based targets and its Scope 3 emissions reduction initiatives.”
But it is also possible that investors are more broadly increasing their scrutiny of transition plans, now that the Say on Climate concept has been widely accepted.
The official result on BHP’s transition plan will not be known until the annual meeting of its Melbourne-based arm on 11 November. But responding to the reports on the vote, Dan Gocher, Director of Climate & Environment at campaign group the Australasian Centre for Corporate Responsibility (ACCR) said: “If reports of 83% support for its climate plan are true, then BHP shareholders have rubber-stamped a plan that will see the company mine coal well beyond 2050 – the date by which BHP has committed to achieve net zero emissions.”