Stockholm (NordSIP) – The Climate Action 100+ investor initiative announced its signatories intend to raise the bar on corporate climate action during the 2021 proxy season and focus on the world’s largest corporate greenhouse gas emitters. The announcement comes ahead of the publication of the initiative’s first Net Zero Company Benchmark.
“Climate Change is a clear and growing systemic risk, which means company directors must act responsibly now to minimise risks and poor climate outcomes. The annual meeting season is upon us and we are closely scrutinising the work of boards to ensure they fully understand such risks. We will oppose relevant board members standing for election if they fail to operate responsibly”, says Tim Youmans, who leads Federated Hermes’ EOS engagement efforts in North America.
There were a total of 126 climate-related proposals filed in North America so far this proxy season, according to Ceres. Climate Action 100+ investors filed 37 shareholder proposals at North American companies seeking disclosure of climate-related risks, alignment of business plans with the goals of the Paris Agreement, and transparency around corporate lobbying practices that influence climate and energy regulations.
Climate Action 100+ highlights five key proposals worthy of consideration by other investors because they advance the central goals of Climate Action 100+. One of the most prominent topics of engagement was lobbying. BNP Paribas Asset Management has filed a proposal to stop ExxonMobil from conducting “corporate lobbying that is inconsistent with the goals of the Paris Agreement”. ExxonMobil is one of the main fossil fuel laggards in terms of planning for the energy transition and is the focus of investor attention during this year’s proxy season. Along similar lines, the California State Teachers’ Retirement System and New York City’s Office of the Comptroller filled proposals with General Motors and Phillips66 regarding Paris-aligned lobbying.
Hermes Investment Management, Caisse de depot et placement du Quebec, and California Public Employees’ Retirement System have also filed a proposal on TCFD reporting with Berkshire Hathaway. As You Sow, a non-profit organisation focusing on shareholder advocacy, filed a proposal regarding the Climate Action 100+ Net Zero Company Benchmark with General Electric.
“The 2021 proxy season is vitally important to investors who are looking for companies to respond positively to the goals of Climate Action 100+. Corporate governance of climate change is critical as board accountability holds the key to the net zero transition We are not looking for a change of heart, but a change of strategy. This requires corporate boards to be held accountable for their stewardship of investors’ capital to ensure sustainable value creation for our pension fund members,” commented Anne Simpson, Managing Investment Director, Board Governance and Sustainability at CalPERS and a Member of the Global Climate Action+ Steering Committee.
The proxy season plays a very important role in investor engagement and getting companies to move along in their sustainable transitions. For the most reluctant managers, the issues need to be brought up to a shareholders’ vote. However, other companies can find solutions before reaching that stage. According to Climate Action 100+, Climate Action 100+ investor signatories have already reached agreements with many companies and have withdrawn shareholder proposals as a result during this proxy season.